The Reserve Bank of India has cut its key interest rate for the first time in nearly five years, as cooling inflation has offered room to stimulate the slowing economy. The Monetary Policy Committee decided to trim the repo rate by 25 basis points to 6.

MUMBAI: The Reserve Bank of India (RBI) cut its key repo rate for the first time in nearly five years on Friday (Feb 7) and signalled a less restrictive policy approach ahead, as it seeks to provide stimulus to the sluggish economy.

India's central bank has cut interest rates for the first time in nearly five years to counter slowing growth in Asia's third largest economy. The Reserve Bank of India (RBI) reduced its repo rate from 6.5% to 6.25%, in line with the expectations of many economists.

Projects FY26 inflation at 4.2%, GDP growth at 6.7%

The bank last cut them in May 2020. The RBI's decision comes less than a week after the government unveiled sweeping income tax cuts in its annual budget, looking to put more money in the hands of consumers reeling from high food prices and weak wage growth.

The Reserve Bank of India’s monetary policy committee (MPC) today unanimously slashed the repo rate by 25 basis points to 6.25% after keeping the key policy rate unchanged for six consecutive times. The MPC also decided unanimously to continue with the 'neutral' policy stance.

The Reserve Bank of India is expected to trim the interest rate by 25 basis points to 6.25% at the policy meeting concluding Friday, in what would be its first rate cut in nearly five years. Indian government bonds have rallied in recent weeks,