RBI Repo Rate Cut to 6% and Accommodative Stance
Why in the news
RBI delivered its second cut of the cycle, lowering the repo rate to 6%. The bigger signal was the stance change from neutral to accommodative, hinting at more easing.
Key facts
- Repo rate: down 25 bps to 6%; stance now accommodative; MPC vote unanimous (six members).
- The last neutral-to-accommodative change was in June 2019; in October 2024 the stance moved from withdrawal of accommodation to neutral.
- With repo at 6% and inflation near 4%, the real interest rate exceeds 2%, leaving room to cut.
- Priority: non-inflationary growth; the exchange rate takes a back seat; surplus liquidity to continue.
| Item | Detail |
|---|---|
| FY26 real GDP growth | 6.5% (Q1 6.5, Q2 6.7, Q3 6.6, Q4 6.3) |
| FY26 CPI inflation | 4% (Q1 3.6, Q2 3.9, Q3 3.8) |
| Terminal repo forecast | 5.25-5.5%, from 5.5-5.75% |
| Expected FY26 cuts | 50-75 bps |
| 10-year yield / rupee | 6.44% / ₹86.68 per USD |
Concerns
- Bank margins may shrink as loan rates fall faster than deposit rates.
- Stocks fell; analysts called the 6.5% growth forecast too optimistic.
Exam angle
- Repo: 6%; stance: accommodative.
- Body: Monetary Policy Committee.