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    Question

    What was the key reason for the RBI cutting the repo

    rate by 25 bps to 6.25% in February 2025?
    A To control inflation and increase loan interest rates Correct Answer Incorrect Answer
    B To encourage borrowing and investment by reducing loan interest rates Correct Answer Incorrect Answer
    C To increase fixed deposit (FD) returns for investors Correct Answer Incorrect Answer
    D To discourage credit growth and reduce money supply Correct Answer Incorrect Answer
    E To curb excessive foreign direct investment (FDI) Correct Answer Incorrect Answer

    Solution

    The RBI cut the repo rate by 25 bps to 6.25%, marking the first rate cut in five years. This move was intended to reduce borrowing costs, stimulate investment, and boost economic growth. Lower interest rates allow businesses and individuals to borrow at lower costs, promoting spending and economic activity.

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