Mumbai, June 6, 2025: The Reserve Bank of India (RBI) on Thursday reduced the benchmark repo rate by 50 basis points, bringing it down to 5.5%. The decision, announced after a meeting of the Monetary Policy Committee (MPC), is aimed at reviving economic momentum and easing the burden on borrowers.
This marks the first rate cut by the central bank in more than a year and reflects a more accommodative stance in light of cooling inflation and sluggish private sector investment.
RBI Governor Sanjay Malhotra stated,
“The MPC decided to reduce the policy Repo Rate under the liquidity adjustment facility by 50 basis points to 5.5%, with immediate effect. The Standing Deposit Facility (SDF) rate has been revised to 5.25%, while the Marginal Standing Facility (MSF) rate and Bank Rate now stand at 5.75%.”
The central bank’s move is expected to translate into lower interest rates on loans, providing relief to homebuyers, vehicle purchasers, and small businesses. Commercial banks are likely to revise their lending rates downward in the coming weeks.
Financial analysts have welcomed the move, noting that lower borrowing costs could boost consumption and investment, both of which have remained subdued in recent quarters due to global uncertainty and domestic demand concerns.
The RBI also reaffirmed its commitment to maintaining financial stability and supporting growth, indicating further action may be considered if macroeconomic indicators continue to show stress.
The next monetary policy review is scheduled for August 2025, when updated inflation and GDP data will provide further direction for policy action.
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