Reserve Bank of India cuts repo rate by 50 bps to boost growth

This marks the second consecutive rate cut in 2025, following a cumulative 100 bps reduction since February. The decision, taken at the MPC’s 55^th meeting chaired by Governor Sanjay Malhotra, was driven by broad-based easing in inflation and the need to support domestic consumption and investment. Five out of six MPC members voted in favour of the 50 bps cut, with one member favouring a smaller 25 bps cut, the MPC said in a statement.

India’s headline CPI inflation eased to a six-year low of 3.2 per cent in April 2025, prompting the RBI to revise its FY26 inflation forecast to 3.7 per cent, down from 4 per cent earlier. The inflation outlook remains benign, supported by falling commodity prices and expectations of a favourable monsoon.

India’s real GDP growth for 2025–26 is projected at 6.5 per cent, underpinned by strong private consumption, rising capital formation, and improving rural demand. However, the RBI flagged global uncertainties and geopolitical tensions as potential downside risks.

Given the changing macroeconomic landscape, the MPC has also shifted its stance from ‘accommodative’ to ‘neutral’ and signalled a cautious data-dependent approach ahead.

The next policy meeting is scheduled for August 4-6, 2025.

ALCHEMPro News Desk (KD)