RBI MPC Meeting Outcome – June 6, 2025

The Reserve Bank of India (RBI) concluded its Monetary Policy Committee (MPC) meeting today and announced several key measures to support the Indian economy amid ongoing global uncertainties. Key Highlights: 1. Repo Rate Cut • The RBI reduced the repo rate by 50 basis points, from 6.0% to 5.5%. • This is the third consecutive rate cut in 2025, totaling a 100 basis points reduction so far this year. • The move is intended to stimulate demand and reduce borrowing costs. 2. Cash Reserve Ratio (CRR) Cut • The CRR was cut by 100 basis points, from 4% to 3%. • This will inject additional liquidity into the banking system, encouraging lending and credit growth. 3. Change in Policy Stance • The RBI shifted its monetary stance from ‘accommodative’ to ‘neutral’. • This signals a more balanced approach to future policy moves, depending on how inflation and growth evolve. 4. Inflation & Growth Outlook • Inflation forecast for FY2025-26 has been revised downward to 3.7% (from 4%). • GDP growth projection for FY2025-26 remains unchanged at 6.5%. • The outlook is supported by expectations of a normal monsoon and stable commodity prices. Possible Impact 1. On Borrowers (Retail & Corporate) • Lower EMIs: Home, car, and personal loan borrowers will benefit as banks reduce lending rates. • Improved affordability and access to credit could boost consumer demand and corporate borrowing. 2. On Banks & NBFCs • Increased liquidity from CRR cut enables greater lending capacity. • Slight margin pressure may be offset by higher loan volumes and credit demand. 3. On Stock Market • Positive sentiment in rate-sensitive sectors such as real estate, banking, auto, and infra. • Market momentum may be supported by liquidity boost and lower interest rate outlook. 4. On Fixed Income / Bonds • Falling bond yields may result in capital gains for investors. • Debt mutual funds (especially long-duration and gilt funds) are likely to benefit.