The Reserve Bank of India (RBI) reduced its key repo rate on Friday for the first time since May 2020, aiming to provide stimulus to the sluggish economy, which is projected to grow at its slowest pace in four years during the current fiscal year.

The Reserve Bank of India cut its policy rate for the first time in nearly five years as economic growth slows and inflation cools.

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 central bank forecast real GDP growth for next fiscal year at 6.7%, and inflation rate at 4.2%.

The Indian economy is likely to get a boost from rural demand picking up and a government-announced tax relief that is expected to support urban consumption, the central bank said in its monthly bulletin on Wednesday.

India's central bank has cut the key repo interest rate at which it lends to commercial banks by a quarter point to 6.25%. It's India's first rate cut in almost five years, but one widely expected from the Reserve Bank of India's new governor.

According to the Reserve Bank of India’s (RBI) monthly State of the Economy report, the Indian economy is on a recovery trajectory in the second half of the current financial year (H2FY25). The report also highlights a growing likelihood that the policy repo rate cut during the February monetary policy review will stimulate domestic demand.

India’s economy has recovered its lost momentum and consumption demand may improve on the back of moderating inflation and tax relief, the Reserve Bank of India said in its monthly bulletin. The government’s budget balances fiscal consolidation and growth objectives by focusing on capital expenditure alongside measures to support consumption,