The Reserve Bank of India cut its repo rate by 50 basis points to 5.50% at its June 2025 policy meeting. The larger cut, double the conventional 25-basis-point increment, brought the total easing conducted by the RBI in 2025 to 100 basis points by mid-year.
Consumer price inflation in India had fallen to approximately 3.2% ahead of the June decision, a level below the RBI's medium-term target of 4% and in the lower half of the central bank's 2-to-6% tolerance band.
THE REPO RATE
The repo rate, the rate at which the RBI lends short-term funds to commercial banks, directly influences borrowing costs across the Indian financial system.
CUT PAIRED WITH SHIFT TO NEUTRAL STANCE
The RBI framed its decision to front-load easing around subdued inflation and growth that remained lower than its aspirations.
Alongside the cut, which one of six MPC members opposed in favour of a 25-basis-point move, the committee shifted its stance from accommodative to neutral, while the RBI separately announced a 100-basis-point cut in the cash reserve ratio to 3%, in four tranches from September 2025. The central bank's communication suggested that future decisions would remain data-dependent and sensitive to any re-emergence of inflationary pressure.