RBI cuts repo rate to 6.25% for the first time in nearly five years to support growth amid cooling inflation. Markets react mildly as economists foresee further easing ahead.
The Reserve Bank of India (RBI) reduced its key repo rate by 25 basis points to 6.25% on Friday, February 7, marking the first interest rate cut in nearly five years. This move comes as part of a broader effort to support India’s sluggish economy amid cooling inflation.
The rate cut is the first since May 2020, when the pandemic prompted aggressive monetary easing. Since then, the RBI focused on controlling inflation, which had remained above the 4% target for much of the period.
Following the announcement, India’s stock markets reacted with mild declines, with the Nifty 50 index dropping 0.5%. The yield on 10-year government bonds rose to 6.7%, and the rupee weakened slightly against the dollar.
The RBI’s updated forecasts project a real GDP growth of 6.7% for the next fiscal year, with inflation expected at 4.2%. For the current fiscal year, the RBI downgraded growth expectations to 6.4%, its weakest forecast in four years, from 6.6%. Inflation is projected at 4.8% for the fiscal year ending in March.
Although the MPC maintained a “neutral” policy stance, contrary to some predictions of a shift to "accommodative," further rate cuts could be on the horizon, according to economists like Shilan Shah from Capital Economics. He forecasts a total of 75 basis points in cuts during this cycle, given the soft patch expected in the economy over the next few quarters.
The RBI’s decision marks a key pivot in India’s monetary policy, as the central bank seeks to foster economic recovery in a challenging global environment.
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The Philippines remains under a "severe threat" from China despite recent efforts by Washington and Beijing to ease tensions, Philippine Defence Secretary Gilberto Teodoro said on Saturday (30 May).
Russia has recalled its ambassador to Armenia for consultations, citing Yerevan's growing rapprochement with the European Union. The move is seen as the latest sign of deteriorating relations between the longtime allies ahead of Armenia's parliamentary election on 7 June.
Thai rescuers say five people have been pulled alive from a flooded cave in remote Laos, where seven villagers became trapped after heavy rain cut off access underground.
Start your day informed with the AnewZ Morning Brief. Here are the top stories for 30 May, covering the latest developments you need to know.
A group of Azerbaijani civil society organisations has called for increased scrutiny of Swiss building materials giant Holcim, citing court rulings and ongoing investigations linked to its subsidiary Lafarge's activities during the Syrian conflict.
The World Health Organization (WHO) says ongoing conflict, funding pressures and international travel restrictions are complicating efforts to contain a fast-growing Ebola outbreak in the Democratic Republic of Congo (DRC).
Thai rescuers say five people have been pulled alive from a flooded cave in remote Laos, where seven villagers became trapped after heavy rain cut off access underground.
Russia and Kazakhstan signed 15 agreements during President Vladimir Putin’s state visit to Astana on Thursday (28 May), including deals on Kazakhstan’s first nuclear power plant and expanded oil cooperation with Russia.
European companies are continuing to deepen their presence in China, with nearly seven in ten firms maintaining or expanding their supply chains despite global efforts to diversify, according to a new survey by the EU Chamber of Commerce.
BP has removed its chair, Albert Manifold, with immediate effect, citing concerns over governance and conduct. The company said its board had unanimously decided that Manifold should no longer serve as chair or director.
The dual-class share structure outlined in SpaceX’s initial public offering (IPO) filing, which gives chief executive Elon Musk outsized control, has reignited one of Wall Street’s longest-running debates over corporate governance.
Kevin Warsh will be sworn in as chair of the U.S. Federal Reserve on Friday as policymakers consider higher interest rates to tackle inflation linked to the Trump administration’s Iran policy.
A government-mediated agreement has suspended an 18-day walkout by about 48,000 Samsung union members, easing fears of damage to South Korea's economy and global chip supply.
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