RBI cuts repo rate by 50 basis points to 5.5%, also slashes CRR

Punjab First News · 6 June 2025, 10:30 AM

The Reserve Bank of India's central office tower in Mumbai — The Reserve Bank of India's central office in Mumbai (file photo) (Pinakpani / Wikimedia Commons, CC BY-SA 4.0)

The Reserve Bank of India (RBI) on Friday, June 6, cut the repo rate by 50 basis points to 5.5%. It was the central bank's third consecutive rate cut this year.

A lower repo rate makes borrowing cheaper for banks, raising hopes of smaller EMIs on home, vehicle and business loans.

The RBI also cut the cash reserve ratio (CRR) by 100 basis points to 3%. This is expected to release about Rs 2.5 lakh crore into the banking system by the end of November, so that banks can lend more.

Governor Sanjay Malhotra said the Monetary Policy Committee decided to front-load the cut to support growth. The policy stance was changed to 'neutral'.

The RBI lowered its inflation forecast for this financial year from 4% to 3.7%, while keeping its GDP growth projection at 6.5%.