RBI Slashes Repo Rate to 5.50% Amid Falling Inflation and Global Headwinds

RBI Slashes Repo Rate to 5.50% Amid Falling Inflation and Global Headwinds

Mumbai: The Reserve Bank of India (RBI) has once again eased monetary policy by lowering the repo rate by 50 basis points, bringing it down to 5.50 percent. This marks the central bank’s third consecutive rate cut, reinforcing its commitment to supporting economic growth amid declining inflation and uncertain global conditions.

The announcement came as part of the RBI’s second monetary policy review for the financial year. With inflation remaining below the central bank’s target of 4 percent for the past three months, and forecasts indicating continued stability in the near term, the monetary policy committee opted for an accommodative stance to boost domestic demand.

“The decision reflects our confidence in a favorable inflation trajectory and our need to accelerate growth momentum,” said an RBI spokesperson following the policy announcement. The cut is seen as a strategic move to ease borrowing costs, encourage investment, and sustain economic recovery in a global environment marked by slowing demand and financial uncertainty.

This latest reduction means that, cumulatively, the repo rate has been slashed by a full percentage point over three successive policy cycles. Analysts note that such a proactive approach underscores the RBI’s dual focus—curbing any residual inflationary pressures while ensuring that the economy is not starved of liquidity.

The central bank has also hinted at a continued accommodative outlook in the near future, depending on how inflation and global financial trends evolve. The repo rate RBI’s primary tool for lending short-term funds to commercial banks—directly impacts loan and deposit interest rates across the banking system. As a result of this reduction, consumers and businesses alike can expect lower EMIs and borrowing costs in the coming weeks.

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