RBI Cuts Repo Rate by 50 bps; Governor Sanjay Malhotra Leads Policy Shift

On June 6, 2025, the Reserve Bank of India (RBI) delivered a surprise 50 basis points cut in the repo rate, bringing it down to 5.50%. This move, the third rate cut this year, aims to support economic activity amid moderating inflation. The RBI also lowered the Cash Reserve Ratio (CRR) by 100 basis points to 3%, unlocking additional liquidity for the banking system.

This is the first major policy announcement under the leadership of Governor Sanjay Malhotra, who took charge in December 2024. The central bank also shifted its stance from “accommodative” to “neutral,” indicating a more data-dependent approach going forward. The RBI maintained its GDP growth forecast for FY26 at 6.5%, buoyed by expectations of improving rural demand, a strong services sector, and ongoing infrastructure investment. Inflation for the same period has been revised downward to 3.7%, supported by falling food and fuel prices. The policy is expected to ease borrowing costs for individuals and businesses, though savers may face lower returns on deposits. The RBI urged banks to transmit the rate cuts promptly to ensure the desired impact on the broader economy..