RBI June 2025 Policy: Repo Cut to 5.5% and Neutral Stance
Why in the news
The RBI’s MPC gave a bigger stimulus than markets expected in June 2025, raising doubts whether easing has reached its end.
Key facts
| Measure | Decision |
|---|---|
| Repo rate | Cut 50 bps to 5.5% (25 bps was expected) |
| FY26 cuts so far | 100 bps (25 in Feb, 25 in Apr, 50 in Jun) |
| CRR | Cut 100 bps to 3%, adding ₹2.5 trillion |
| Stance | Accommodative to neutral |
- Liquidity of ₹9.5 trillion added since early 2025; WACR sits near the lower end of the LAF corridor.
Is this the terminal rate?
- Front-loaded cuts and a neutral stance imply little room left.
- April CPI inflation: 3.2%; FY26 forecast cut to 3.7% from 4%.
- Neutral real rate is 1.4%-1.9%, which today’s policy rate matches.
- FY26 GDP growth kept at 6.5%, as in FY25; lifting potential growth above 7% needs structural reform and capex.
Exam angle
- Repo 5.5%, CRR 3%; decision body: MPC.