Overview

• The Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, marking its third consecutive reduction in 2025.
• Banks’ cash reserve ratio was lowered by 100 basis points to 3%, releasing about ₹2.5 lakh crore in durable liquidity over four tranches.
• The RBI retained its GDP growth forecast for FY26 at 6.5% and trimmed its inflation projection to 3.7%, citing broad-based price moderation.
• The shift of the monetary policy stance from accommodative to neutral underscores limited room for additional rate cuts.
• Lower borrowing costs are aimed at boosting credit growth in sectors such as housing and autos, though transmission depends on bank pass-through and loan demand.