In a significant move to boost economic activity, the Reserve Bank of India (RBI) has reduced the key repo rate by 50 basis points to 5.5%, following a unanimous decision at the Monetary Policy Committee (MPC) meeting held from June 4–6, chaired by RBI Governor Sanjay Malhotra. This marks the second consecutive rate cut in two months, aimed at making borrowing cheaper as inflation continues to ease.
Governor Malhotra noted that inflation has softened considerably, with retail inflation projected at 3.7% for the current financial year, down from 4?rlier. April data showed inflation dipping to 3.16%, well within the RBI's comfort zone. Food and core inflation are also expected to remain benign in the coming months.
To further stimulate liquidity, the RBI also slashed the Cash Reserve Ratio (CRR) by 100 basis points, unlocking ?2.5 lakh crore for the banking system. Despite global economic fragility, Malhotra emphasized that India’s robust sectoral balance sheets and improving domestic demand keep its growth prospects intact. The RBI retained its GDP growth forecast at 6.5% for FY 2025.
The real estate sector has welcomed the decision. Vimal Nadar of Colliers India said the rate cut would boost buyer sentiment and improve housing affordability, particularly in mid-income segments. Piyush Bothra, co-founder of Square Yards, termed it the “right dosage” for the sector, expecting a rise in residential sales and new launches.
With forex reserves standing at $691 billion, enough to cover over 11 months of imports, India remains a strong investment destination. The RBI’s dovish stance signals confidence in the country’s macroeconomic resilience and is likely to bring cheer to borrowers and investors alike.
OpinionExpress.In
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