RBI MPC Meeting June 2025 Highlights: Repo Rate Cut by 50 bps, Policy Stance Turned Neutral

RBI MPC

RBI Repo Rate Cut June 2025: Key Policy Decision Announced

The Reserve Bank of India (RBI) has announced a 50 basis points (bps) cut in the repo rate, bringing it down from 6% to 5.5% during its June 2025 Monetary Policy Committee (MPC) meeting. This is significantly higher than the expected 25 bps cut and marks a major shift in India’s monetary policy.

Additionally, the RBI has changed its policy stance to ‘Neutral’ from ‘Accommodative’, reflecting a shift in focus from purely supporting growth to balancing inflation and financial stability.

What This Means for Borrowers and the Indian Economy

  • Loan EMIs may decrease as banks are likely to pass on the benefit of lower repo rates to borrowers.

  • The shift to a neutral stance indicates that further rate cuts are not guaranteed and will depend on incoming data.

  • Easing inflation pressures, particularly in food prices, have given the RBI room to cut rates.

RBI June 2025 Monetary Policy Highlights

Key Metric Latest Update
Repo Rate Cut by 50 bps to 5.5%
Policy Stance Changed to Neutral
Inflation Forecast (FY25) Revised down to 3.7%
GDP Growth Estimate (FY25) Lowered to 6.5%
April CPI Inflation 3.16%, within 2–4% target
Last Rate Cut (April 2025) 25 bps cut to 6%

Global Outlook Remains a Concern

While domestic inflation appears contained, the RBI flagged several global challenges:

  • Global GDP and trade forecasts revised downward

  • Persistent geopolitical tensions

  • Rising financial stability risks

  • AI and tech disruption adding to regulatory and systemic stress

Economic Context: Inflation & Growth Trends

  • CPI inflation eased to 3.16% in April, comfortably within the RBI’s target band.

  • India’s GDP grew 7.4% in Q4 of FY25, but annual growth is projected to slow to 6.5%, the lowest in four years.

These trends provided the RBI with enough room to act decisively, even as it exercises caution in future policy moves.

Recent Rate History

  • Feb 2025: 25 bps cut (6.5% → 6.25%)

  • Apr 2025: 25 bps cut (6.25% → 6.0%), stance changed to Accommodative

  • June 2025: 50 bps cut (6.0% → 5.5%), stance now Neutral

Implications for Borrowers & Markets

  • Borrowers: Likely reduction in home, auto, and personal loan EMIs

  • Businesses: Lower financing costs may support CAPEX and investment

  • Stock Market: Markets may respond positively to the aggressive rate cut, but global cues remain critical

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