📉 RBI Repo Rate Cut 2025: Key Highlights from June Monetary Policy

On June 6, 2025, the Reserve Bank of India (RBI) announced a major policy move in its Monetary Policy Committee (MPC) meeting, introducing a significant cut in the repo rate, along with other monetary easing measures to boost liquidity and stimulate economic growth.

🔻 RBI Cuts Repo Rate by 50 Basis Points

The RBI has reduced the repo rate from 6.0% to 5.5%, marking the third consecutive rate cut in 2025. Earlier, in February and April 2025, the repo rate was trimmed by 25 basis points each.

🔹 Total rate cut in 2025 so far: 100 basis points
🔹 Aim: To support growth amidst moderating inflation
🔹 Source: Reuters

💰 CRR (Cash Reserve Ratio) Reduced by 100 Basis Points

The central bank also announced a 100 basis point reduction in the CRR, from 4% to 3%, to be implemented in phases between September and December 2025. This will infuse more liquidity into the banking system.

🔹 Source: Reuters

🔄 Shift in Policy Stance: From “Accommodative” to “Neutral”

The RBI has shifted its policy stance from ‘accommodative’ to ‘neutral’, indicating a more balanced approach in future rate actions. This suggests that further rate cuts may now be less likely unless economic conditions warrant it.

🔹 Source: Economic Times

📊 Inflation and GDP Forecasts

• Inflation (CPI): Estimated at 3.7% for FY 2025-26, down from the earlier projection of 4%.

• GDP Growth: Forecast remains unchanged at 6.5% for FY 2025-26.

🔹 Source: Indian Express

🏡 Impact on Loan EMIs

The repo rate cut is good news for borrowers. It is expected to bring down interest rates on home loans, auto loans, and personal loans, thereby reducing EMIs.

For example, on a ₹50 lakh home loan, the monthly EMI could see a noticeable reduction, benefiting both existing and new borrowers.

🔹 Source: Samayam

💸 Impact on Fixed Deposit (FD) Investors

On the flip side, fixed deposit investors may face lower returns, as banks are likely to revise interest rates downward in response to the repo rate cut.

🔹 Source: Economic Times

The RBI’s June 2025 monetary policy reflects a proactive step to support economic growth amid easing inflation. While borrowers can rejoice with falling interest rates, investors relying on fixed-income instruments may need to reconsider their portfolio strategies.