Skip to content
Free updates Login
SSCBankingNABARD / RBI

RBI Rate Cut to 5.5%: MPC Backs Growth Over Inflation

9 June 20251 min read
ECONOMYRBI Rate Cut to5.5%: MPC BacksGrowth OverInflation9 June 2025safalsetu.com

Why in the news

The Reserve Bank’s Monetary Policy Committee put growth ahead of price worries, cutting rates after retail inflation fell to a 69-month low.

Key facts

  • Repo rate: reduced by 50 bps to 5.5%; third cut since February 2025.
  • Stance: neutral again (it was accommodative in April), signalling little room for more cuts unless growth weakens sharply.
  • Growth forecast: GDP at 6.5% in FY 2025-26.

Rationale

  • Inflation is subdued; no major elections ease any need for pre-emptive tightening.
  • Neutral stance keeps room to raise rates if prices jump, with the monsoon uncertain.

Fiscal-monetary coordination

  • Fiscal stimulus has plateaued, so monetary policy is expected to lead growth.

Exam angle

  • New repo rate: 5.5%. Stance: neutral.
  • Decision-making body: Monetary Policy Committee.

Test yourself

1. By how much did the RBI MPC cut the repo rate in its June 2025 decision, per these notes?

The repo rate was cut by 50 bps to 5.5%.

2. What policy stance did RBI adopt after its latest cut, having been accommodative in April?

The stance reverted from accommodative to neutral.

3. What GDP growth did RBI project for FY 2025-26 in these notes?

GDP was projected at 6.5% for FY 2025-26.

This topic is part of Daily Current Affairs 7 June 2025 (15 topics).

All topics of the dayDay quizJune 2025

Read more