RBI MPC cuts repo rate by 50 bps to 5.50%, reduces CRR by 100 bps and shifts stance to neutral
The RBI's Monetary Policy Committee on 6 June 2025 cut the policy repo rate by 50 basis points to 5.50% and changed its stance to neutral, while the RBI announced a 100-basis-point CRR cut to 3.0% in four tranches.
Summary
The Reserve Bank of India's Monetary Policy Committee (MPC), at its 55th meeting from 4 to 6 June 2025 chaired by Governor Sanjay Malhotra, cut the policy repo rate by 50 basis points to 5.50% with immediate effect. The standing deposit facility rate was adjusted to 5.25%, and the marginal standing facility rate and Bank Rate to 5.75%. Five members voted for the 50 bps cut while Saugata Bhattacharya voted for a 25 bps cut, and the MPC changed its stance to neutral, saying limited space was left after 100 bps of cuts since February 2025. The RBI also cut the cash reserve ratio by 100 bps to 3.0% of net demand and time liabilities in four tranches of 25 bps from fortnights beginning 6 September, 4 October, 1 November and 29 November 2025, releasing about ₹2.5 lakh crore of primary liquidity by December 2025. Real GDP growth for 2025-26 was projected at 6.5% and CPI inflation at 3.7%.
Key facts
- Meeting
- 55th MPC, 4–6 Jun 2025
- Repo rate
- Cut 50 bps to 5.50%
- SDF / MSF
- 5.25% / 5.75%
- CRR
- Cut 100 bps to 3.0% of NDTL in four 25-bps tranches (Sep–Nov 2025)
- Liquidity
- About ₹2.5 lakh crore by Dec 2025
- Stance
- Neutral
- Projections 2025-26
- GDP 6.5%, CPI 3.7%
Practice MCQs 6 questions
To what level did the RBI's Monetary Policy Committee cut the policy repo rate on 6 June 2025?
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Correct answer: B — 5.50%
The MPC voted to reduce the policy repo rate by 50 basis points to 5.50% with immediate effect.
To what level did the RBI decide in June 2025 to reduce the cash reserve ratio (CRR) by the end of its staggered cuts?
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Correct answer: D — 3.0% of NDTL
The RBI decided to cut the CRR by 100 bps to 3.0% of NDTL in four equal tranches of 25 bps each, releasing about ₹2.5 lakh crore by December 2025.
What monetary policy stance did the MPC adopt at its June 2025 meeting?
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Correct answer: A — Neutral
After 100 bps of repo rate cuts since February 2025, the MPC decided to change its stance to Neutral, saying monetary policy had very limited space left to support growth.
Consider the following statements about the RBI MPC decision of 6 June 2025: 1. CPI inflation for 2025-26 was projected at 3.7%. 2. All six MPC members voted for the 50-basis-point repo rate cut. Which of the above is/are correct?
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Correct answer: A — 1 only
Statement 1 is correct: CPI inflation for 2025-26 was projected at 3.7%. Statement 2 is incorrect: five members voted for the 50 bps cut, while Saugata Bhattacharya voted for a 25 bps cut.
What real GDP growth did the RBI project for 2025-26 in its June 2025 policy?
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Correct answer: C — 6.5%
The RBI projected real GDP growth for 2025-26 at 6.5%.
The RBI MPC's June 2025 decision was stated to be in consonance with the medium-term target for CPI inflation of
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Correct answer: A — 4% within a band of +/- 2%
The MPC said its decision is in consonance with the objective of achieving the medium-term target for CPI inflation of 4% within a band of +/- 2%, while supporting growth.