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RBI Cuts Repo Rate to 5.5% and Slashes Cash Reserve Ratio to 3%

RBI shifts to neutral stance ahead of phased CRR cuts set to pump Rs2.5 lakh crore into the banking system.

The European Central Bank building, right, in Frankfurt, Germany, pictured in June 2025.
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Overview

  • The Monetary Policy Committee delivered a third straight rate cut by reducing the policy repo rate by 50 basis points to 5.5 percent on June 6.
  • Officials changed the policy stance from accommodative to neutral to allow for careful assessment of incoming growth and inflation data.
  • A 100 basis point cut in the Cash Reserve Ratio to 3 percent, to be implemented in four tranches, is projected to release about Rs 2.5 lakh crore of liquidity by December 2025.
  • Inflation forecasts for fiscal 2025–26 were revised down to 3.7 percent from 4 percent, while the GDP growth projection remained unchanged at 6.5 percent.
  • RBI says these measures aim to lower borrowing costs and support credit expansion as global trade tensions and economic uncertainties persist.