RBI Cuts Repo Rate by 50 Bps to 5.50% to Balance Inflation Target and Growth

Monetary Policy Statement Dated, 06-06-2025

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), chaired by Governor Sanjay Malhotra, held its 55th meeting from June 4 to 6, 2025.

1. Key Policy Decision – Repo Rate Slashed to 5.50%

In a significant move aimed at balancing inflation control with economic growth, the MPC has reduced the policy repo rate by 50 basis points, bringing it down from 6.00% to 5.50%.

2. Revised Policy Rates

Following the repo rate cut, the key lending and borrowing rates stand revised as follows:

• Policy Repo Rate – 5.50%
• Standing Deposit Facility (SDF) Rate – 5.25%
• Marginal Standing Facility (MSF) Rate – 5.75%
• Bank Rate – 5.75%

3. Rationale – Inflation Target and Growth Support

The decision aligns with the RBI’s monetary policy framework, which aims to maintain Consumer Price Index (CPI) inflation at 4% within a tolerance band of ±2%. At the same time, the cut is intended to stimulate economic growth, especially in sectors sensitive to interest rates, such as housing, infrastructure, and consumer demand.

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