The Reserve Bank of India (RBI) has once again offered relief to the general public by reducing the burden of EMIs. RBI Governor Sanjay Malhotra announced a 50 basis point cut in the repo rate. Following this decision, the repo rate now stands at 5.50%. This is not the first time the central bank has provided such relief—the RBI had previously reduced the repo rate to ease financial pressure on citizens. Before the Monetary Policy Committee (MPC) meeting, several experts had predicted a possible rate cut. Despite global market uncertainties, Governor Malhotra emphasized that "India's economy remains strong, and there are ample investment opportunities in the Indian stock market."
Repo Rate Previously Cut in February and April
In the last two MPC meetings held in February and April, the RBI had already slashed the repo rate by a total of 0.50%, bringing it down to 6%. Given that trend, expectations for another rate cut in the latest meeting were widespread.
What Did Experts Say?
Earlier, experts had suggested that the RBI might reduce the repo rate by 0.25% again and that this trend could continue in the upcoming August meeting as well. On the other hand, an SBI research report had predicted the possibility of a 0.50% "jumbo" cut in the June review meeting itself.
While the growth trajectory has improved, challenges like uneven consumption, weak private capital expenditure, and sluggish manufacturing growth still persist, said CareEdge Ratings.
Composition of the MPC
The Monetary Policy Committee consists of three members from the RBI and three external members appointed by the government. The RBI members include Governor Sanjay Malhotra, Deputy Governor M. Rajeshwar Rao, and Executive Director Rajiv Ranjan. The external members are Nagesh Kumar, Sougata Bhattacharya, and Professor Ram Singh.