RBI Slashes Repo Rate by 50 bps to 5.50% in June 2025

In a significant move to bolster economic growth, the Reserve Bank of India's Monetary Policy Committee, in its June 2025 meeting, announced a 50 basis points reduction in the repo rate, bringing it down to 5.50%. This decision, aimed at achieving the medium-term consumer price index (CPI) inflation target of 4% while stimulating growth, reflects a positive inflation outlook, with headline CPI moderating to a near six-year low. The policy adjusts the Standing Deposit Facility (SDF) rate to 5.25% and the Marginal Standing Facility (MSF) rate and Bank Rate to 5.75%. The RBI's decision considers various economic factors, including the declining trajectory of food inflation and stable core inflation. This rate cut is expected to lower borrowing costs for commercial banks, thereby encouraging lending and investment, and providing a much-needed impetus to the economy. The RBI's proactive stance is crucial for maintaining price stability and supporting sustainable economic expansion.