ECONOMY
RBI slashes Repo Rate by 50 basis points to 5.5%, loans set to get cheaper
- IBJ Bureau
- Jun 07, 2025
The Reserve Bank of India (RBI) lowered the Repo Rate on Friday by 50 basis points, as global economic uncertainty continues.
The decision came after the central bank’s Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, wrapped up its three-day meeting that began on June 4. The meeting was closely watched by economists, businesses and investors.
This is the third straight time that the RBI has cut rates this year. After a 25-basis point cut in April, it has now gone a step further with a 50-basis point reduction. The Repo Rate is now 5.5 per cent. This means loans, especially home and personal loans, could get cheaper, if banks pass on the benefit to customers.
Following the Repo Rate cut, the RBI has also lowered the Standing Deposit Facility (SDF) rate to 5.25 per cent and the Marginal Standing Facility (MSF) and Bank Rate to 5.75 per cent. These rates help banks manage short-term money needs and play a role in controlling liquidity in the system.
Since February 2025, the RBI has slashed the Repo Rate by a full 100 basis points. With this sharp reduction, it believes there is now less room left to cut rates further to support growth. So, the RBI has changed its policy stance from “accommodative” to “neutral”. In simple words, this means they are now more cautious and will wait and watch before making further changes.
Assuming normal rainfall, the RBI now expects inflation to be 2.9 per cent in Q1 (April–June), 3.4 per cent in Q2 (July–September), 3.9 per cent in Q3 (October–December) and 4.4 per cent in Q4 (January–March).
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