RBI Cuts Repo Rate by 50 Basis Points, Returns to Neutral Policy Stance

The Reserve Bank of India reduced the repo rate by 50 basis points to 5.5 percent on June 6, 2025, marking the third consecutive rate cut. The monetary policy stance has returned to neutral amid a fragile global growth environment.

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The Reserve Bank of India has reduced its benchmark interest rate by 50 basis points on Friday, June 6, bringing the repo rate down from 6 percent to 5.5 percent. This is the third consecutive rate cut by the central bank, following similar reductions in February and April this year.

In line with the repo rate cut, the Standing Deposit Facility (SDF) rate and the Marginal Standing Facility (MSF) rate have also been reduced by 50 basis points. With this move, the Monetary Policy Committee has now cut interest rates by a total of 100 basis points since February.

RBI Governor Sanjay Malhotra stated that after a series of rapid rate reductions, the committee believes there is now limited policy space remaining to further support economic growth.

The RBI has also revised its monetary policy stance from "accommodative" back to "neutral", a shift from the position it held during the April policy announcement.

Commenting on the global economic landscape, Governor Malhotra said that the international growth environment remains fragile and unpredictable. As a result, several multilateral institutions have revised their global growth forecasts downward.

Despite global uncertainties, he emphasized that the Indian economy continues to show resilience and promise. He highlighted three key strengths driving India's growth potential — demographics, digitalisation, and domestic demand — describing them as the "3Ds" that make India an attractive destination for both domestic and international investors.