The RBI’s policy intervention was not just timely it was strategic. With inflation well under control at 3.61% in February 2025, and the global economy facing uncertainty, the central bank had ample headroom to stimulate growth and it did so. The repo rate cut, effectively lowering the cost of borrowing for banks, businesses and consumers, sends a clear signal India is not stepping back. Instead, it is stepping forward. Lower interest rates on home loans, business credit and vehicle financing will put more disposable income in the hands of consumers and encourage private sector investments.
The rate cut aligns perfectly with the government’s vision to drive growth-led recovery, ensuring liquidity flows to sectors that need it most. Be it MSMEs, real estate or startups, cheaper credit will invigorate entrepreneurship and consumer demand. As businesses feel the pinch of U.S. tariffs, lower borrowing costs could provide the much-needed cushion to maintain momentum.
