Economic Buzz: RBI slashes benchmark repo rate by 50bps to 5.50%, Cuts CRR by 100 bps to 3%

The Reserve Bank of India (RBI), in its second bi-monthly monetary policy held on 6 June 2025 decided to reduce benchmark repo rate by 50bps bringing it to 5.50% from 6%. This is the third rate cut in a row. The Monetary Policy Committee (MPC) met on the 4th, 5th and 6th of June to deliberate and decide on the policy repo rate. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points to 5.50 per cent with immediate effect.

The MPC also decided to change the stance from accommodative to neutral. After having reduced the policy repo rate by 100 bps in quick succession since February 2025, under the current circumstances, monetary policy is left with very limited space to support growth, the governor noted. From here onwards, the MPC will be carefully assessing the incoming data and the evolving outlook to chart out the future course of monetary policy in order to strike the right growth-inflation balance, he added. Meanwhile, to further provide durable liquidity, RBI decided to reduce the cash reserve ratio (CRR) by 100 basis points (bps) to 3.0 per cent of net demand and time liabilities (NDTL) in a staggered manner during the course of the year.

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