Mumbai: In a significant monetary policy decision, the Reserve Bank of India (RBI) has reduced the repo rate by 50 basis points, bringing it down to 5.5% with immediate effect. The announcement was made by RBI Governor Sanjay Malhotra, following the conclusion of the Monetary Policy Committee (MPC) meeting held over three days — June 4, 5, and 6.
Governor Malhotra stated that the MPC undertook a comprehensive assessment of the domestic and global economic outlook before arriving at the decision. Alongside the rate cut, the RBI has also shifted its policy stance from 'accommodative' to 'neutral', signaling a more balanced approach to managing inflation and supporting growth.
The 50 bps reduction in the repo rate — the rate at which RBI lends to commercial banks — is expected to translate into lower interest rates on home loans and other retail borrowings. This move aims to stimulate credit growth, revive demand, and support the ongoing economic recovery.
Analysts believe that this jumbo cut reflects the central bank’s proactive approach in addressing the evolving macroeconomic challenges and ensuring financial stability. The impact of the rate cut will be closely watched across sectors, particularly housing and consumer finance.
This is the second rate cut in a row. In April 2025, the RBI had lowered the repo rate by 25 basis points to 6 per cent, while also changing its policy stance from 'neutral' to 'accommodative'. The latest move builds on that momentum, aiming to boost economic activity amid evolving global and domestic conditions.
The rate reduction is expected to lead to lower home loan interest rates, offering relief to existing and prospective homebuyers. Analysts anticipate a positive impact on the real estate and consumer lending sectors, as the cost of borrowing eases further.
