MPC goes for frontloaded 50-bps repo rate cut

Reserve Bank of India (RBI) Governor Sanjay Malhotra
| Photo Credit:
FRANCIS MASCARENHAS

In a surprise move, the Reserve Bank of India’s six-member rate-setting monetary policy committee voted for a front loaded 50 basis points repo rate from 6 per cent to 5.50 per cent to support growth, which is facing external headwinds such as global financial market volatility, geopolitical tensions, trade fragmentation and supply chain disruptions.

With this rate cut, the MPC has cumulatively cut the the repo rate by 100 basis points in the current calendar year. The MPC changed the monetary policy stance from “accommodative” to “neutral.”

The RBI revised the inflation projection for FY26 lower to 3.7 per cent from earlier 4 per cent even as GDP growth forecast has been kept unchanged at 6.5 per cent.

Near-term and medium-term outlook gives confidence on durable alignment with the 4 per cent target, said Governor Sanjay Malhotra.

Published on June 6, 2025