Good news for borrowers! RBI cuts repo rate again
If you’ve got a home loan, car loan, or are planning to take one soon, there’s some great news coming out of the RBI headquarters. In its June 2025 monetary policy review, the Reserve Bank of India has cut the repo rate by a chunky 50 basis points—bringing it down to 5.50%. That’s the third rate cut this year!
MPC goes for a bigger cut this time
RBI Governor Sanjay Malhotra announced that the Monetary Policy Committee (MPC) met on June 4, 5, and 6 and decided unanimously to go for this rate cut. Just for context, they had trimmed the rate by 25 bps in April, and this new cut doubles that.
This means borrowing just got cheaper. So if you’ve been hesitating to take out a loan or looking to refinance, now might be your moment.
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Shift in stance: From ‘accommodative’ to ‘neutral’
Apart from the rate cut, the RBI has also changed its monetary stance. It’s moved from an “accommodative” approach (where they lean towards boosting growth) to a more balanced, “neutral” one.
Why the shift? According to Malhotra, the RBI needs to keep a closer eye on the global economy and make sure India’s inflation stays in check—while also making sure growth doesn’t slow down.
CRR cut brings a major liquidity boost
In another big move, the RBI also slashed the Cash Reserve Ratio (CRR) by 1%. That might sound technical, but here’s the deal: it basically frees up ₹2.5 lakh crore for banks to lend more easily. That’s more money flowing into the economy, especially for sectors that need a push.
Here’s a quick snapshot of what RBI announced
- Repo rate down by 50 bps → Now at 5.50%
- Monetary stance shifted to neutral
- Cash Reserve Ratio (CRR) cut by 1% → adds ₹2.5 lakh crore liquidity
- Retail inflation forecast lowered to 3.7% for FY26
- GDP growth outlook for FY26 stays at 6.5%
- Current Account Deficit to remain well within safe levels
- Forex reserves at $691.5 billion (as of May 30)
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What does this mean for you?
If you’ve got loans linked to the repo rate—like home loans that reset every few months—you’ll likely see your EMIs drop soon. For new borrowers, interest rates might become more attractive. And with extra liquidity in the banking system, banks may also offer better lending terms.
What’s next?
The next MPC meeting is scheduled for August 4 to 6. Till then, all eyes will be on how banks respond to today’s decisions and whether borrowers get the full benefit of the rate cuts.
Bottom line:
The RBI just gave the economy a big boost—and gave borrowers a reason to smile. Whether you’re looking to take a loan or just want to stay updated on economic moves, this repo rate cut is a big deal.
