{"id":45744,"date":"2025-10-27T03:04:56","date_gmt":"2025-10-26T21:34:56","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=45744"},"modified":"2025-10-28T16:08:17","modified_gmt":"2025-10-28T10:38:17","slug":"rbi-cuts-repo-rate-by-25-bps-to-6-perc-lowers-gdp-forecast-to-6-5-perc-amid-global-trade-tensions","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rbi-cuts-repo-rate-by-25-bps-to-6-perc-lowers-gdp-forecast-to-6-5-perc-amid-global-trade-tensions\/","title":{"rendered":"RBI Cuts Repo Rate by 25 bps to 6%, Lowers GDP Forecast to 6.5% Amid Global Trade Tensions"},"content":{"rendered":"<h2>What\u2019s in Today\u2019s Article?<\/h2>\n<ul>\n<li>RBI Repo Rate Cut 2025 Latest News<\/li>\n<li>Key Highlights of the MPC Meeting<\/li>\n<li>Reason Behind RBI&#8217;s Decision to Cut Repo Rate<\/li>\n<li>RBI Repo Rate Cut 2025 FAQs<\/li>\n<\/ul>\n<h2>RBI Repo Rate Cut 2025 Latest News<\/h2>\n<ul>\n<li>The Reserve Bank of India\u2019s <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/monetary-policy-committee\/\" target=\"_blank\">Monetary Policy Committee<\/a> cut the repo rate by 25 basis points to 6% and lowered the FY2026 growth forecast from 6.7% to 6.5%, citing global uncertainties from ongoing trade wars.\u00a0<\/li>\n<li>RBI Governor warned that new tariffs could hamper domestic growth and exports, though inflation risks remain limited due to falling commodity and crude oil prices.<\/li>\n<\/ul>\n<h2>Key Highlights of the MPC Meeting<\/h2>\n<ul>\n<li><strong>RBI Cuts Repo Rate Amid Global Uncertainties<\/strong>\n<ul>\n<li>MPC reduced the repo rate by <strong>25 basis points to 6%<\/strong>, marking the <strong>second consecutive rate cut<\/strong>.\u00a0\n<ul>\n<li>The repo rate is the interest rate at which commercial banks take or borrow money from the Reserve Bank of India.<\/li>\n<\/ul>\n<\/li>\n<li>This move aims to support economic growth amid increasing global trade tensions and uncertainties arising from reciprocal tariffs announced by the US.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Monetary Policy Stance Turned Accommodative<\/strong>\n<ul>\n<li>The MPC also shifted its stance from \u2018neutral\u2019 to \u2018accommodative\u2019, signalling the possibility of further rate cuts in the future.\u00a0\n<ul>\n<li>A <strong>neutral stance<\/strong> gives the central bank flexibility to adjust rates based on inflation and growth conditions.\u00a0<\/li>\n<li>An <strong>accommodative stance<\/strong> focuses on promoting economic growth by lowering interest rates.\u00a0<\/li>\n<li>In contrast, a <strong>withdrawal of accommodation<\/strong> aims to control inflation through <strong>rate hikes<\/strong> or tighter monetary policies.<\/li>\n<\/ul>\n<\/li>\n<li>RBI Governor clarified that this stance indicates only two possible directions ahead \u2014 either status quo or further cuts.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Growth Forecast Lowered<\/strong>\n<ul>\n<li>The RBI revised India\u2019s GDP growth forecast for FY2026 down to 6.5% from 6.7%, citing the negative impact of trade wars and policy uncertainties on global and domestic economic activity.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Inflation Risks Under Control<\/strong>\n<ul>\n<li>While global uncertainties pose risks to inflation through possible currency pressures and imported inflation, the fall in commodity and crude oil prices is expected to keep domestic inflation within control.\u00a0<\/li>\n<li>The CPI inflation forecast for FY2026 was revised down to 4% from 4.2%.<\/li>\n<li>As per the RBI, <strong>growth concerns outweigh inflation worries<\/strong> at present.\u00a0<\/li>\n<li>Trade frictions are expected to <strong>hurt investment, consumption, and net exports<\/strong>, thereby impeding domestic economic momentum.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Additional Measures Announced by the RBI<\/strong>\n<ul>\n<li>Introduction of forward contracts in Government securities<\/li>\n<li>Access of SEBI-registered non-bank brokers to NDS-OM<\/li>\n<li>Comprehensive review of trading and settlement timings across various market segments<\/li>\n<li>Introduction of \u2018bank.in\u2019 exclusive Internet Domain for Indian banks and \u2018fin.in\u2019 domains for other non-bank entities<\/li>\n<li>Enabling Additional Factor of authentication in cross-border Card Not Present transactions<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><img decoding=\"async\" src=\"https:\/\/vajiram-prod.s3.ap-south-1.amazonaws.com\/image4_d618b598f2.webp\" alt=\"image4.webp\" \/><\/p>\n<h2>Reason Behind RBI&#8217;s Decision to Cut Repo Rate<\/h2>\n<ul>\n<li><strong>Global Trade Tensions Drive Caution<\/strong>\n<ul>\n<li>The US administration\u2019s 26% reciprocal tariff on Indian goods and rising global trade tensions have increased economic uncertainty, prompting a cautious and proactive monetary response from the RBI.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Risks to Growth Take Priority<\/strong>\n<ul>\n<li>The MPC emphasized that growth remains fragile, especially after a weak first half in FY2024-25, and now faces fresh risks due to the global slowdown.\u00a0<\/li>\n<li>Domestic recovery needs continued support, even though inflation is under control.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Improved Inflation Outlook Enables Policy Support<\/strong>\n<ul>\n<li>Falling food inflation and a decisive improvement in the inflation outlook have given the MPC the room to prioritize non-inflationary, sustainable growth.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2>RBI Repo Rate Cut 2025 FAQs<\/h2>\n<p><strong>Q1.<\/strong> Why did RBI cut the repo rate in 2025?<\/p>\n<p><strong>Ans.<\/strong> Due to global trade tensions and low inflation, RBI cut rates to support fragile domestic growth.<\/p>\n<p><strong>Q2.<\/strong> What is the new RBI repo rate?<\/p>\n<p><strong>Ans.<\/strong> The RBI reduced the repo rate by 25 basis points to 6% in the latest Monetary Policy Committee meeting.<\/p>\n<p><strong>Q3.<\/strong> What is RBI&#8217;s FY2026 GDP growth forecast?<\/p>\n<p><strong>Ans.<\/strong> RBI lowered India\u2019s GDP growth forecast for FY2026 from 6.7% to 6.5% due to global economic uncertainties.<\/p>\n<p><strong>Q4.<\/strong> What does an accommodative stance mean?<\/p>\n<p><strong>Ans.<\/strong> An accommodative stance signals RBI\u2019s intent to support growth by maintaining or further reducing interest rates if needed.<\/p>\n<p><strong>Q5.<\/strong> Is inflation a concern for RBI now?<\/p>\n<p><strong>Ans.<\/strong> No, RBI noted that inflation is under control, aided by falling commodity and crude oil prices.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/rbi-cuts-key-rate-by-25-basis-points-growth-projection-lowered-to-6-5-9935391\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/timesofindia.indiatimes.com\/business\/india-business\/trumps-tariffs-exacerbate-uncertainties-why-rbi-cut-repo-rate-by-25-basis-points-to-support-gdp-growth\/articleshowprint\/120116347.cms\" target=\"_blank\" rel=\"nofollow noopener\">ToI<\/a> | <a href=\"https:\/\/www.livemint.com\/market\/stock-market-news\/rbi-monetary-policy-meeting-2025-live-rbi-mpc-key-expectation-repo-rate-to-be-cut-25-bps-sanjay-malhotra-trump-tariff-11744133436763-page-2.html\" target=\"_blank\" rel=\"nofollow noopener\">LM<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RBI slashes repo rate to 6% and lowers FY2026 GDP forecast to 6.5% amid global trade tensions and benign inflation outlook.<\/p>\n","protected":false},"author":5,"featured_media":45745,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[],"class_list":{"0":"post-45744","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/45744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=45744"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/45744\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/45745"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=45744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=45744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=45744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}