Current Affairs - Economy - Discussion

The repo rate was reduced by 50 basis points to 5.5%, representing the third cut since February 2025. This move by the central bank is designed to stimulate economic growth at a time when inflation is well within the targeted range, thereby allowing for monetary easing. A 50 basis point reduction can significantly lower borrowing costs across sectors—affecting home loans, vehicle finance, and business credit. This helps encourage credit demand and boosts consumption and investment, which are key drivers of economic recovery. Such rate cuts are also vital for monetary policy transmission and support the broader macroeconomic goal of sustaining growth.