RBI MPC meeting HIGHLIGHTS : RBI MPC unanimously cuts repo rate by 50 basis points to 5.5%

"Reserve Bank of India's bold move: what next after it cuts by 50bp?
The RBI cut policy rates by more than expected and changed its policy stance from accommodative to neutral. We think that with this move, the RBI is signalling a near-term pause, while leaving the door open for more easing if growth or inflation weakens further. We continue to expect another 25bp rate cut in the fourth quarter of this year."

"RBI may have decided to move quickly to a more appropriate policy rate level after recent headwinds and low inflation prints. A shift toward neutral stance means more rate cuts may be unlikely in the near-term.”

"Today’s monetary policy committee (MPC) meeting sprang several major surprises. The 50 basis point repo rate cut came in as a surprise against consensus and our expectation of a 25bp rate cut. However, given the change in stance of monetary policy from “accommodative” to “neutral” and the RBI’s communication of very little space for more support from monetary policy, our expectation of a terminal repo rate of 5.50% in the current cycle remains largely unchanged.

The larger than expected rate cut, coupled with announcement of a large CRR cut around the beginning of the busy season, brings in more focus on transmission of the monetary policy actions into the real economy. Today’s announcement will not only push banks’ external benchmark linked lending rates lower, but will also lower MCLR and deposit rates, thereby, bringing in greater pace and intensity to transmission."

“A 50-bps policy rate cut, a staggered 100 bps CRR cut and change of stance to neutral, RBI today's monetary policy communication was action packed - innovative, out of the box and an unanticipated surprise. The MPC has broadly addressed any concerns on slowdown in growth on account of global uncertainties and  fully capitalized on the softening domestic inflation to deliver a frontloaded rate cut, staggered durable liquidity injection yet conserving the space for future action.

The policy is definitely positive for all sectors of the economy, particularly for banking and finance. In particular lower cost of borrowing will act as a counterbalance to any uncertainty.”

“The RBI has front-loaded everything and wants banks to react now. By changing the stance, I think they are trying to indicate no immediate rate cuts,” said Venkatakrishnan Srinivasan, managing partner at financial advisory firm Rockfort Fincap. “

“The ball is in the banks’ court to transmit easier financial conditions faster,” said Madhavi Arora, an economist at Emkay Global Financial Services Ltd.

“The RBI’s decision to cut the repo rate by a sharper-than-expected 50 basis points to 5.5% reflects its strong intent to support economic growth amid rising global uncertainties and weak domestic demand. The cumulative 100 bps cut since February 2025, along with the phased 1% CRR reduction, will ease borrowing costs and improve liquidity in the system, potentially boosting credit flow. However, with the shift in stance from ‘accommodative’ to ‘neutral’, the central bank has signaled a pause, choosing to closely monitor inflation trends and global developments before taking further action.”

The RBI’s Monetary Policy Committee (MPC) exceeded expectations by slashing the Repo rate by 50 basis points. Further, the cash reserve ratio (CRR) was reduced by 100 basis points from 4% to 3% in a staggered manner, implemented in four equal tranches of 25 basis points each, in the fortnights beginning September 6, October 4, November 1, and November 29 to provide durable liquidity. The cut in CRR is expected to release primary liquidity of about Rs 2.5 lakh crore to the banking system by the end of November 2025.

The RBI changed its stance from ‘accommodative’ to ‘neutral.’ The outlook for food inflation is soft, and the core inflation outlook remains benign. Given the benign inflation, the inflation forecast for the year has been revised downward from 4% to 3.7%. The FY26 GDP growth forecast is maintained at 6.5 %. The risks are evenly balanced.

“The RBI's decisive 50 bps repo rate cut to 5.5% and a 100 bps CRR reduction over four quarters unleash a powerful boost for India’s economy. By lowering borrowing costs and freeing up bank liquidity, sectors like real estate, automobiles, and consumer durables are set to thrive. With CPI inflation at 3.7% and FY26 GDP growth projected at 6.5%, fueled by steady rural demand and rising urban consumption, the USDINR forward rate at ~86.72 signals stability. This dual policy move will likely spur lending, investment, and job creation, despite global uncertainties. Now the RBI stance being neutral, all future RBI events for the next few quarters will be non-events.”

“MPC frontloaded the rate cuts, reducing repo rates by 50 bps and also cut CRR by 100 bps. These measures came as a positive surprise to equity markets as there will be greater impetus to growth and there could be faster pick up in the interest rate sectors. Oddly, RBI also changed its stance from accommodative to neutral, thereby signaling that further softening of monetary conditions may not be easily forthcoming. Bond markets experienced some steepening with shorter end of the yield curve seeing some softening. It is complex messaging from RBI where they have eased the policy rates and liquidity but made no promises for the future”

"The Reserve Bank of India has delivered a sharper-than-expected policy easing, cutting the repo rate by 50 basis points to 5.5% and slashing the Cash Reserve Ratio by 100 basis points to 3%. These aggressive rate cuts are providing strong support to Indian equity markets, while the CRR reduction is expected to inject approximately ₹2.5 lakh crore of liquidity into the banking system.

In addition, the RBI has shifted its policy stance from 'accommodative' to 'neutral', signalling that interest rates are likely to remain stable in the near term, which is supporting the rupee and limiting any further depreciation."

Indian stock markets surged after the Reserve Bank of India announced a larger-than-expected 50 basis point repo rate cut and a 100 basis point CRR reduction. The sensex jumped over 300 points in early trade, while the nifty rose more than 0.5 per cent.

Investor sentiment was buoyed by the RBI’s decisive moves to boost liquidity and support growth, with analysts viewing the measures as a strong signal of the central bank’s commitment to navigating global economic uncertainty.

RBI Governor Sanjay Malhotra’s MPC address ends.

In a major move to enhance liquidity in the banking system, the Reserve Bank of India to reduce the Cash Reserve Ratio (CRR) by 100 basis points—from 4 per cent to 3 per cent.

Indian stock markets turned positive following the RBI’s announcement of a 50 basis point repo rate cut. The Sensex reversed early losses to rise over 50 points, while the Nifty also bounced back into the green after opening in the red. Investor sentiment improved on the back of supportive policy measures and a downward revision in the inflation forecast.

RBI Governor Sanjay Malhotra announced that India’s real GDP growth for FY2025 is projected at 6.5 per cent, supported by steady rural demand and improving urban consumption. However, he flagged ongoing uncertainty in global trade, which continues to weigh on merchandise exports. On the inflation front, the RBI has revised its CPI inflation forecast for FY2025-26 downward to 3.7 per cent from the earlier estimate of 4.0 per cent, citing easing price pressures.

The Reserve Bank of India has cut the repo rate by 50 basis points, bringing it down to 5.5%, marking the third consecutive rate cut aimed at boosting economic growth as global conditions remain fragile. Announcing the Monetary Policy Committee’s decision, RBI Governor Sanjay Malhotra said, “Inflation has softened in the last six months,” but added that the “last mile of inflation control remains protracted.” He also noted that the global economic backdrop continues to be uncertain, warranting a cautious but supportive policy stance.

Amit Pabari, MD of CR Forex
"The Reserve Bank of India is expected to deliver a third consecutive 25-bps rate cut, bringing the repo rate down to 5.75%. While this reflects the central bank’s continued focus on supporting growth, the dovish stance may weigh on the rupee in the near term. A narrowing interest rate differential between India and the U.S. could reduce the appeal of Indian assets for foreign investors, potentially triggering FII outflows and adding pressure on the currency."

The majority of analysts believe that the Reserve Bank of India (RBI) will reduce the repo rate by 25 basis points (bps) once again, however a study from the State Bank of India (SBI) predicts a massive rate decrease of 50 bps.

Based on an evaluation by the RBI, most banks have lowered their repo-linked external benchmark-based lending rates (EBLRs) and the marginal cost of funds-based lending rate (MCLR) in reaction to the 50 basis points drop in the policy repo rate since February 2025. (PTI)

The Reserve Bank of India's Monetary Policy Committee (MPC) commenced its deliberation on June 4 which faces new headwinds from global trade uncertainties, particularly US tariff actions under US President Donald Trump.

As the RBI wraps up its three-day monetary policy meeting today, all eyes are now on what could be the third straight interest rate cut of India. Expectations are high, with investors betting on a 0.25 per cent to 0.5 per cent reduction in rates. Read More https://www.wionews.com/business-economy/rbi-s-mpc-meeting-will-this-be-the-third-consecutive-rate-cut-1749183187400

Reserve Bank of India Governor Sanjay Malhotra will announce the Monetary Policy Committee’s (MPC) decision at 10 am today. The announcement will be live-streamed on the RBI’s official YouTube channel, X (formerly Twitter), and website. A press conference is expected around noon, also available on the same platforms. Stay tuned to WION for real-time updates.

Indian stock markets opened lower today as investors remained cautious ahead of the Reserve Bank of India's policy decision. The BSE Sensex slipped over 75 points in early trade, while the NSE Nifty also opened in the red, dragged down by financial and tech stocks. Market participants are largely staying on the sidelines, awaiting cues from the central bank. The RBI is widely expected to cut the repo rate for the third consecutive time in a bid to support economic growth amid moderating inflation.

The RBI’s policy stance also reflects growing global risks. The ongoing US-China tariff war, tighter global financial conditions, and falling commodity prices are creating a challenging environment for trade and investment. Central banks worldwide — including the Federal Reserve, European Central Bank, and Bank of England — are tilting towards rate cuts to offset geopolitical shocks.

By aligning its policy stance with global peers, the RBI is attempting to shield India’s growth engine from external volatility while maintaining price stability.

In April 2025, the RBI’s Monetary Policy Committee set the tone for an accommodative shift by trimming the repo rate by 25 basis points, moving it from 6.25 per cent to 6.00 per cent. It was the second back-to-back rate cut this year. More importantly, the policy stance was altered from ‘neutral’ to ‘accommodative’, signalling that the central bank was gearing up to prioritise growth as inflation stayed within comfortable limits.

The decision then was unanimous, showcasing a clear consensus among committee members on the need for supportive monetary measures amid softening economic indicators.

If the RBI reduces the repo rate again today, borrowers are likely to benefit through lower EMIs on home, car, and personal loans. Banks typically adjust their marginal cost of lending rate (MCLR) in line with repo rate changes, passing on the benefit to customers — especially for floating-rate loans.

On the flip side, deposit rates may also come down, meaning lower returns for savers and retirees. This dual effect makes today’s decision crucial for both households and investors alike.

The RBI’s monetary policy is determined by a six-member Monetary Policy Committee, comprising both RBI insiders and government-appointed economists. The current members are:

• Sanjay Malhotra – Governor, RBI and MPC chairperson

• Michael Patra – RBI Deputy Governor

• Rajiv Ranjan – Executive Director, RBI

• Ashima Goyal – Economist and professor

• Shashanka Bhide – Senior advisor, NCAER

• Rekha Jain – Former IIM Ahmedabad professor and telecom policy expert

Together, the team balances inflation targets, growth projections, and macroeconomic risks to decide the repo rate and overall policy stance.

India’s economic data gives the central bank room to act. Consumer price inflation dropped to 3.34 per cent in March, comfortably below the RBI’s medium-term target of 4 per cent. Meanwhile, GDP growth for FY25 is projected at 6.3 per cent, down from 9.2 per cent in FY24, reflecting a significant slowdown in momentum.

This “Goldilocks” scenario — slowing growth with benign inflation — strengthens the case for continued monetary easing. A rate cut today would aim to boost consumption, revive investment, and cushion the economy from external shocks.

Indian equities are likely to kick off the day on a quiet but watchful note, with early GIFT Nifty trends hinting at a flat opening around 24,845.

On Thursday, however, markets closed higher in anticipation of a dovish stance from the RBI, with indices like the Nifty 50 rallying above 24,700. Investor focus remains on whether the central bank signals further easing after today.
 

As the countdown begins for the RBI’s policy statement, a broad market consensus has formed around another rate cut. According to a Reuters poll conducted between May 19 and 28, 53 of 61 economists believe the RBI will cut rates by 25 basis points. Two forecast a 50-basis point reduction, while six expect the central bank to hold rates steady.

Fueling expectations of a deeper cut, SBI Research, in its pre-policy note titled “Prelude to MPC Meeting – June 4–6, 2025”, argued:

“We expect a 50-basis point rate cut in June, as a jumbo rate cut could act as a counterbalance to uncertainty and support the credit cycle.”

The note cited a combination of subdued domestic demand, global trade frictions, and decelerating investment as reasons for a stronger push from the central bank.