The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points to 5.5% in its June 2025 Monetary Policy Committee (MPC) meeting. The stance has been changed from ‘Accommodative’ to ‘Neutral’ in light of easing inflation and a challenging global growth outlook. RBI Governor Sanjay Malhotra emphasized India’s economic resilience despite global uncertainties.
The Reserve Bank of India (RBI), the country’s central banking institution responsible for regulating the monetary policy and ensuring financial stability, has announced a 50 basis points (bps) cut in the repo rate, reducing it to 5.5% during its June 2025 Monetary Policy Committee (MPC) meeting. The policy stance has also been revised from ‘Accommodative’ to ‘Neutral’, reflecting a shift in the growth-inflation balance.
RBI Governor Sanjay Malhotra highlighted the significant changes in the economic landscape, stating that the global growth and trade projections have been revised downward, creating a more difficult trade-off between growth and inflation. He emphasized that the early onset of the monsoon is a positive sign but expressed caution due to persistent global uncertainty and the impact of disruptive technologies like AI.
This 50 bps cut comes after previous reductions of 25 bps each in February and April, bringing the total rate cut to 100 bps this year. The inflation outlook for 2025 has been revised downward to 3.7%, with food and core inflation both easing.
The latest Consumer Price Index (CPI) inflation for April stood at 3.16%, well within the RBI’s target band of 2–4%. However, GDP growth is projected to slow down. While India’s economy grew at a four-quarter high of 7.4% in Q4 FY24, the full-year growth estimate for 2024-25 has been revised down to 6.5%, the lowest in four years, according to the National Statistics Office (NSO).
Despite this, Malhotra conveyed optimism about India’s economic fundamentals. He noted that the Indian economy presents a picture of “strength, stability, and opportunities,” supported by robust balance sheets across key sectors—corporates, banks, households, the government, and the external sector.
India’s strong macroeconomic stability, combined with price and political certainty, positions it well amidst the evolving global economic order, according to the central bank.
