The Reserve Bank of India cut its benchmark repo rate by 25 basis points to 6.0% in April 2026, the second consecutive cut this cycle. The MPC voted 5-1 in favour. CPI inflation eased to 3.6%, below the 4% target, creating room for easing. GDP growth forecast retained at 6.7% for FY26.
Why it matters
The RBI's April 2026 rate cut signals a clear pivot to an accommodative stance after two years of tight monetary policy. With inflation cooling below target and global growth headwinds from US tariff policy, the MPC prioritised growth support. A lower repo rate reduces borrowing costs for banks, which should transmit to cheaper home and business loans. However, transmission depends on liquidity conditions — the RBI also injected ₹1.5 lakh crore via OMOs to ensure banks pass on the benefit. For exam purposes, understand the transmission mechanism: repo rate → MCLR → lending rates.
The Reserve Bank of India cut its benchmark repo rate by 25 basis points to 6.0% in April 2026, the second consecutive cut this cycle. The MPC voted 5-1 in favour. CPI inflation eased to 3.6%, below the 4% target, creating room for easing. GDP growth forecast retained at 6.7% for FY26.
Why it matters
The RBI's April 2026 rate cut signals a clear pivot to an accommodative stance after two years of tight monetary policy. With inflation cooling below target and global growth headwinds from US tariff policy, the MPC prioritised growth support. A lower repo rate reduces borrowing costs for banks, which should transmit to cheaper home and business loans. However, transmission depends on liquidity conditions — the RBI also injected ₹1.5 lakh crore via OMOs to ensure banks pass on the benefit. For exam purposes, understand the transmission mechanism: repo rate → MCLR → lending rates.
