RBI cuts repo rate by 25 bps to 5.25% amid rupee slump.

The Reserve Bank of India reduced the repo rate by 25 basis points to 5.25%, aiming to support growth as the rupee continues to weaken and inflation remains moderate.

The decision was taken during the December Monetary Policy Committee (MPC) meeting. With inflation staying within the comfort zone and economic growth showing signs of recovery, the central bank decided that a slight rate cut would ease borrowing costs and encourage market activity.

Why the Rate Was Cut

Inflation is currently stable and manageable.

Rupee has been dropping against the US dollar, creating pressure on imports.

Slowing global demand and financial uncertainty required a supportive policy stance.

Impact on Common People

Home loan EMIs may reduce, but gradually as banks revise lending rates.

Personal and auto loans could become cheaper.

FD interest rates may decrease in coming months.

Borrowers benefit, but savers may see slightly lower returns.

Impact on the Economy

Lower rates can boost consumption and business investment.

Real estate and automobile sectors may see higher demand.

Liquidity support announced by RBI will help stabilize bond and forex markets.

Impact on Rupee

Even though the rate cut aims to support the economy, it may lead to temporary pressure on the rupee as lower rates somet

imes reduce foreign capital inflows.