In a major move to support economic recovery, the Reserve Bank of India (RBI) cut the repo rate by 50 basis points (bps), bringing it down to 5.50 percent. RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) unanimously decided to reduce the policy rate, offering much-needed relief to borrowers across sectors.
The MPC convened on June 4, 5, and 6 to evaluate the current macro-economic and financial conditions and set the course for monetary policy. After detailed deliberations, the committee agreed to slash the repo rate with immediate effect, aiming to boost demand and lending activity in the economy.
The current rate cut follows earlier reductions, continuing a trend that started in February 2025. Back then, the MPC initiated the first rate cut since May 2020 to counter the slowdown in economic activity. In April, the committee followed up with another 25-basis-point cut. With the latest decision, the RBI has now lowered the repo rate by a total of 100 basis points since February 2025.
RBI Shifts Policy Stance to Neutral Amid Global Economic Uncertainty
In addition to reducing the interest rate, the RBI has changed its policy stance. The central bank shifted from an ‘accommodative’ to a ‘neutral’ approach, indicating a more balanced outlook on inflation and growth. Governor Malhotra stated that the fast-changing global economic environment demands close monitoring and flexibility in decision-making.
“The MPC currently sees limited room to support growth further through rate cuts. Hence, the committee decided to adopt a neutral stance. This will allow us to respond swiftly to any changes in economic conditions,” Malhotra explained during the press briefing.
Experts believe that the latest move by the RBI will lower borrowing costs, encourage spending, and provide momentum to economic growth, especially as global uncertainty continues to affect financial markets and trade.
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