1. Home
  2. Current Affairs
  3. Current News
  4. RBI Cuts Repo Rate by 50 Basis Points

RBI Cuts Repo Rate by 50 Basis Points

  • 06 Jun 2025

On 6th June 2025, the Reserve Bank of India (RBI) slashed the repo rate by 50 basis points, reducing it from 6.0% to 5.5%, in response to a significant drop in inflation.

Key Points

  • Inflation Control: Retail inflation has fallen to 3.2%, below the RBI’s lower tolerance threshold of 4%, prompting the rate cut.
  • Liquidity Infusion: A 100 basis points cut in the Cash Reserve Ratio (CRR), rolled out in four tranches (Sept 6–Nov 29), is set to inject ₹2.5 lakh crore into the banking system.
  • Policy Shift: With a cumulative 100 basis points repo rate reduction since February 2025, RBI has shifted its monetary policy stance from "accommodative" to "neutral."
  • Improved Outlook: Inflation forecast has been revised down to 3.7%, supported by strong rabi and kharif harvests and easing food prices.
  • Economic Strength: India’s economic fundamentals remain robust, with healthy balance sheets across sectors, stable external indicators, and strong investor confidence.
  • Global Factors: Declining global crude oil prices are also aiding the inflation outlook and anchoring expectations.