Mumbai: Giving in to overwhelming demands for an easing of the monetary policy, the Reserve Bank of India (RBI) on Monday lowered its short-term lending rate by 25 basis points in a move that could potentially reduce the cost of borrowings on personal and corporate loans.

In his bi-monthly monetary policy review for the current fiscal year at the RBI headquarters here on Mint Street, Governor Raghuram Rajan on the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to reduce the repurchase rate to 7.25 percent.