RBI Governor Sanjay Malhotra announces 50 bps repo rate cut
In a bold move to support economic growth, the Reserve Bank of India (RBI) on Friday reduced the repo rate by 50 basis points to 5.5%, marking the third consecutive rate cut this year. RBI Governor Sanjay Malhotra announced the decision at the conclusion of the Monetary Policy Committee’s (MPC) three-day meeting, which began on 4 June 2025.
The MPC also shifted its stance from ‘accommodative’ to ‘neutral’, signalling a cautious yet supportive approach amid global economic uncertainties. The latest rate cut is the steepest since March 2020, when the central bank slashed rates by 75 basis points during the pandemic.
Following the announcement, the Standing Deposit Facility (SDF) rate now stands at 5.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been adjusted to 5.75%.
With this move, the RBI has cumulatively reduced the repo rate by 100 basis points since February 2025. This downward trend in rates is expected to further ease borrowing costs for individuals and businesses, as most commercial banks align their lending rates with repo-linked benchmarks.
The decision comes amid a notable decline in retail inflation, which dropped to 3.16% in April from 3.34% in March, staying well below the RBI’s 4% comfort zone. This has provided the central bank more room to focus on stimulating growth.
India’s GDP grew by 7.4% in the March 2025 quarter, though overall FY25 growth settled at 6.5%. For FY26, the RBI has retained its GDP growth projection at 6.5%, with quarterly estimates of 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.
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Governor Malhotra acknowledged global headwinds such as geopolitical tensions and shifting trade policies but expressed confidence in India’s growth outlook, supported by strong services performance and a favourable monsoon forecast.
This marks the latest signal from the central bank toward a more pro-growth monetary policy, with the pace of rate cuts reflecting growing optimism over inflation control and economic resilience.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
