In a significant move to bolster the Indian economy, the Reserve Bank of India (RBI) has announced a 50 basis point cut in the repo rate, bringing it down to 5.5%. This decision, revealed during the Monetary Policy Committee (MPC) meeting on June 6, 2025, is aimed at stimulating domestic growth amidst global economic uncertainties. 

Key Highlights of the RBI's Decision:

  • Repo Rate Reduction: The repo rate has been reduced by 50 basis points, marking the third consecutive cut in recent times. 

  • GDP Growth Forecast: The RBI has retained India's GDP growth forecast at 6.5% for the fiscal year 2025-26, reflecting confidence in the country's economic trajectory. 

  • Inflation Outlook: The Consumer Price Index (CPI) inflation projection for FY26 has been revised downward to 3.7% from the earlier estimate of 4%. 

  • Policy Stance: The MPC has shifted its stance from 'accommodative' to 'neutral', indicating a balanced approach towards managing inflation and supporting growth. 

Implications for Borrowers and Investors:

The reduction in the repo rate is expected to lead to lower interest rates on loans, making borrowing more affordable for consumers and businesses. This move is anticipated to boost spending and investment, thereby stimulating economic activity.

For investors, the rate cut may influence bond yields and equity markets, potentially leading to adjustments in investment strategies.

Conclusion:

The RBI's proactive approach in reducing the repo rate underscores its commitment to supporting economic growth while keeping inflation in check. As the global economic landscape continues to evolve, such measures are crucial in ensuring the resilience and stability of India's economy.

Stay tuned to NewsBuddy for more updates on this developing story.