The Reserve Bank of India (RBI) cut its key repo rate by 25bp, to 6.25%

The Reserve Bank of India (RBI) reduced its key repo rate by 25 basis points to 6.25%, the first cut since May 2020.

• The move aims to stimulate the sluggish economy, which is projected to grow at its slowest pace in four years.
• Monetary Policy Committee (MPC) – The six-member panel (three RBI officials, three external members) voted unanimously for the rate cut while maintaining a neutral policy stance.
• India’s economy is expected to grow 6.4% this fiscal year, below initial projections, with weaker manufacturing and corporate investment weighing on growth. Next year’s growth is forecast in the 6.3%-6.8% range.
• Inflation Trends – Retail inflation remains above the 4% target but eased to a four-month low of 5.22% in December, creating room for rate easing.

This article was written by Eamonn Sheridan at www.forexlive.com.