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In its June 2025 monetary policy announcement, the Reserve Bank of India (RBI) reduced the repo rate by 50 basis points, bringing it down to 5.50%. This move marks the third consecutive rate cut in 2025, following 25 basis point reductions in both February and April.

The decision comes amidst signs of easing inflation and a focus on stimulating economic growth, particularly in sectors such as real estate, MSMEs, and consumer lending.

Implications of the Current Repo Rate Cut:

Borrowers: Home loans, car loans, and business loans may become more affordable as banks are expected to reduce interest rates.

NBFCs & Financial Institutions: Lower repo rates can improve liquidity and enhance lending capacity.

Investors: Fixed deposit and bond yields may decline, prompting a shift toward equities or alternative investments.

Corporates: Easier access to credit could support capital expansion and operational funding, especially for SMEs and startups.

Policy Decisions

• Repo Rate cut by 50 bps to 5.50%.
• SDF adjusted to 5.25%, MSF and Bank Rate to 5.75%.
• MPC shifts stance from accommodative to neutral after a cumulative 100 bps reduction in 2025.

RBI’s accommodative stance signals its commitment to supporting economic recovery while keeping inflation within the target range.

Disclaimer: This article provides general information existing at the time of preparation and we take no responsibility to update it with the subsequent changes in the law. The article is intended as a news update and Affluence Advisory neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this article. It is recommended that professional advice be taken based on specific facts and circumstances. This article does not substitute the need to refer to the original pronouncement.