In a significant move to turbocharge economic growth, India's central bank, the Reserve Bank of India (RBI), announced on Friday a 25 basis point cut to its key lending rate. This marks the first rate reduction since May 2020, bringing the policy repo rate down from 6.5% to 6.25%.
The RBI's decision comes amid weaker-than-expected GDP growth, with the economy expanding by 5.4% in the July-September 2024 quarter. 📊 This rate cut aims to stimulate growth as the country navigates challenges ahead of the upcoming October-December GDP figures.
Newly appointed RBI Governor Sanjay Malhotra stated that the current growth-inflation dynamics provide the central bank with the flexibility to support the economy. While growth is anticipated to recover from the previous quarter's dip, it still lags behind the 8.2% growth rate recorded in the prior fiscal year.
Governor Malhotra also highlighted external factors affecting the outlook, saying, \"Excessive volatility in global financial markets and continued uncertainties about global trade policies coupled with adverse weather events pose risks to the growth and inflation outlook.\" 🌍💹
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India's RBI announces first rate cut since 2020 amid slowing growth
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