India’s central bank, called the Reserve Bank of India (RBI), has reduced interest rates by 0.5% — this is the third time in a row they have cut rates. The move comes because inflation (the rise in prices) is going down and the country’s economic growth is slowing.
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The key interest rate, known as the repo rate, is now 5.5%. This is the lowest it has been in three years. The repo rate is important because it affects how much banks charge people when they borrow money for things like home loans and car loans.
RBI Governor Sanjay Malhotra explained that the economy is not growing as fast as they hoped. So, the RBI wants to encourage people to spend and businesses to invest more, especially since there is uncertainty in the global economy.
India’s economy grew by 6.5% last year, which is still the fastest among major countries. But this is much slower compared to the 9.2% growth in the previous year.
At the same time, inflation has dropped to 3.16%, the lowest in six years. This happened because food prices have fallen. The RBI expects inflation to stay low in the coming months, helped by good monsoon rains, lower oil prices, and a strong Indian currency.
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Because of the rate cuts, borrowing money will be cheaper for people and companies. This means homebuyers will find it easier to afford loans, which could help the real estate market grow again — especially affordable housing, which was hit hard during the pandemic.
After the RBI’s announcement, the Indian stock markets went up sharply, showing positive reactions from investors.
