New Delhi, June 06 (H.S): Reserve Bank of India (RBI) Governor Sanjay Malhotra announced on Friday that after reducing the repo rate by 0.50 percent to 5.5 percent, there is limited scope for further cuts. This decision followed the RBI’s Monetary Policy Committee (MPC) review, marking a total one percent reduction from February to now. Malhotra indicated that future monetary policy adjustments would rely on upcoming data, noting a GDP growth estimate of around 6.5 percent and an inflation forecast of over 3.7 percent this year and four percent next year, suggesting restricted scope for additional repo rate decreases. He expressed hope that the cut would positively affect economic growth, but expected its impact to emerge in the latter half of the 2025-26 financial year.

Following the recent decrease, the repo rate is now at its lowest in three years, with quicker transmission of the rate cut to consumers anticipated compared to past trends. Malhotra affirmed India’s status as an attractive investment destination, highlighted by a return of foreign investment and a 14 percent rise in gross Foreign Direct Investment (FDI) flow to $81 billion in the 2024-25 financial year. However, net FDI flow has declined to $40 million from $10.1 billion the previous year. Additionally, the RBI lowered the Cash Reserve Ratio (CRR) by one percent, releasing ₹2.5 lakh crores in liquidity for banks. Prior repo rate reductions were noted in February and April with minor adjustments.

Hindusthan Samachar / Jun Sarkar