In a strategic move to reignite economic momentum, India’s Reserve Bank announced a 25 basis point cut in its key lending rate, reducing the policy repo rate from 6.5% to 6.25%. This marks the first rate adjustment since May 2020.
The decision comes amid a slowing GDP growth rate of 5.4% for the July-September 2024 quarter, falling short of expectations and well below the 8.2% recorded in the previous fiscal year.
RBI Governor Sanjay Malhotra highlighted that the current dynamics between growth and inflation have created an opportunity for the central bank to support economic expansion. “Excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events pose risks to the growth and inflation outlook,” Malhotra stated.
The rate cut aims to stimulate investment and consumption by making borrowing cheaper, thereby fostering a more conducive environment for businesses and consumers alike.
As the economy navigates these challenges, the upcoming GDP figures for October-December will be crucial in assessing the effectiveness of the RBI’s measures and the overall resilience of India’s economic landscape.
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India's RBI announces first rate cut since 2020 amid slowing growth
cgtn.com
