RBI rate cut News
A Type II error occurs when the central bank fails to reject the null hypothesis, assuming that the inflation undershoot is temporary, and hence does not cut rates—but in reality, inflation remains persistently low and the output gap continues to weaken.
The CPI inflation moderated to 3.34 per cent in March 2025, a 67-month low due to a sharp correction in food inflation.
Deflation in food continued for the second consecutive month in February, down 1.0 per cent month-on-month.
Concurrently, industrial output for January surged to 5 per cent, substantially outpacing the projected 3.5 per cent.
According to RBI Governor Sanjay Malhotra, stronger policy frameworks and robust macro fundamentals remain the key to resilience and fostering overall macroeconomic stability.
Despite these challenges, the RBI is expected to initiate a rate-cutting cycle in 2025, potentially reducing rates by 50-75 basis points as inflation moves closer to its medium-term target of 4 per cent.
While major global central banks have begun cutting rates, market volatility has increased after the US elections.
RBI Governor Shaktikanta Das said the committee changed the stance but will remain unambiguously focused on the durable alignment of inflation to target while supporting growth.
The RBI had last changed rates in February 2023, when the repo rate was hiked to 6.5 per cent.
"The rate cut relief by RBI is not passed on to consumers by either private or public sector banks. This is the biggest problem or the challenge that needs to be addressed," Goenka said.
The Reserve Bank of India (RBI) on Friday cut repo rate by 25 basis points, from 5.40% to 5.15% in yet another move to boost the national economy.
The RBI lowered the benchmark lending rate by 25 basis points to a nearly nine-year low of 5.75 per cent.
The central bank has slashed the short-term lending rate (repo rate) by 25 basis points (0.25 percentage points) each in its last two policy reviews.
The RBI had cut the key short-term lending rate (repo) by 25 basis points each in its last two policy reviews. The central bank is slated to announce its next bi-monthly policy decision on June 6.
The RBI has reduced the key policy rate by 25 basis points to 6 percent.
Banks are reluctant to cut deposit rates in the fiscal year`s last quarter, as they are keen to shore up their books while not losing hefty deposits.
The surprise 25 basis points rate cut to 6.25 percent is a measure to broad base credit growth across all the sectors of the economy that's gathering more steam now, the governor said.
The RBI's monetary policy review is slated in February.
The Reserve Bank in its fifth bi-monthly review of this fiscal kept repo rate unchanged at 6 percent and reverse repo at 5.75 percent.
RBI has kept the key interest rate unchanged, on the expected lines.
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