RBI cuts interest rates by 25 bps, first in five years

Key highlights from the RBI governor's speech

• MPC voted unanimously to cut repo rate by 25 bps to 6.25%. MPC voted unanimously to maintain 'neutral' policy stance
• Average inflation lower since flexible inflation targeting adopted. Flexible inflation targeting framework served India well.
• CPI has mostly stayed aligned with the target
• To continue to improve macro outcomes in best interest of economy. To use flexible inflation targeting to make best macro decision
• Jul-Sept GDP growth forecast to 7.0% from 7.3%
• Jan-Mar consumer price inflation (CPI) forecast to 4.4% from 4.5% earlier
• RBI sees Oct-Dec GDP growth at 6.5%

This follows a major tax relief to the middle class in the Budget that was tabled earlier this month. The interest rate cut is expected to spur growth that has fallen to the lowest in the last four years.