The Reserve Bank of India (RBI) reduced its key repo rate on Friday for the first time since May 2020, aiming to provide stimulus to the sluggish economy, which is projected to grow at its slowest pace in four years during the current fiscal year.

India’s new central bank governor cut interest rates for the first time in almost five years on Friday to help spur a slowing economy as global risks intensify.

The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) cut the repo rate, the rate at which the RBI lends to other banks by 25 basis points to 6.25 per cent. This is the first rate cut initiated by the RBI since 2020 amid growing concerns about economic growth losing momentum. Currently the repo rate is 6.5 per cent.