The Reserve Bank has cut the repo rate again, and with US President Trump’s reciprocal tax hike coming into effect from yesterday, the Reserve Bank has lowered the country’s economic growth forecast for the current fiscal year from 6.70 percent to 6.50 percent.
What is the benefit of a repo rate cut
At the end of the Reserve Bank of India‘s Monetary Policy Committee meeting held in Mumbai, the bank’s Governor Sanjay Malhotra announced the second consecutive quarter percentage point cut in the repo rate.
There is no attempt to tighten the norms for providing gold and jewellery loans. New guidelines are to be issued soon to harmonise the norms of non-banking financial institutions and banks regarding gold and jewellery loans.
[Sanjay Malhotra, Reserve Bank Governor]
Key decisions taken in the meeting
Repo rate cut by quarter percentage point to 6 percent
The country’s economic growth forecast for 2025-26 has been revised down to 6.50 percent
Inflation forecast down from 4.20 percent to 4 percent due to falling food and crude oil prices
The country continues its journey towards price stability and sustainable growth
US reciprocal tariffs are a challenge; but they will not have a major impact on India
For India, the country’s goods exports are likely to be affected
Unless new challenges arise, the repo rate will remain unchanged (or may be reduced further) in the coming months
The Reserve Bank of India (RBI) has said that the National Bank of India (NBI) may decide to increase the maximum limit for UPI transactions for merchants. The decision has been taken in consultation with banks and relevant institutions, taking into account the changing needs of users.
It is noteworthy that currently only Rs 5 lakh can be sent to merchants per day. However, it has been announced that the maximum limit for individual UPI transactions will continue to be Rs 1 lakh.
The next monetary policy meeting will be held from June 4 to 6.
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