RBI Cuts Repo Rate by 50 bps, Boosts Liquidity to Support Growth Amid Easing Inflation

By-Mr. Raghvendra Nath, MD, Ladderup Asset Managers

With prices continuing to ease, RBI has cut the repo rate by 50 basis points in a move aimed at supporting the current macroeconomic momentum. This is twice the reduction that most economists had anticipated. While India’s real GDP growth forecast for FY26 remained at 6.5%, primarily due to geopolitical uncertainties affecting trade, inflation is expected to ease further to 3.7%, supported by early start of kharif season. Additionally, the RBI’s decision to gradually reduce the CRR in four equal tranches of 25 basis points over this year is likely to enhance liquidity in the system and lower the cost of funds for banks leading to lowering cost for borrowers and thus support private investment and domestic consumption.