The Reserve Bank of India reduced its policy repo rate by 25 basis points to 6.25% at the Monetary Policy Committee meeting concluded on 7 February 2025, delivering the first rate cut in nearly five years. The previous reduction had come in May 2020, when the central bank cut rates in response to the COVID-19 pandemic.
Governor Sanjay Malhotra, who assumed leadership of the RBI in late 2024, cited easing inflation and the need to provide supportive conditions for economic growth as the principal considerations behind the committee's decision.
MARKET RESPONSE
Indian government bond yields rose after the MPC announcement, as traders were disappointed that the RBI did not pair the cut with additional liquidity measures.