RBI slashes repo rate by 50 bps to 5.50 per cent
Central bank had trimmed key benchmark lending rate by 25 bps each in February and April this year on the recommendations of the governor-headed MPC
The Reserve Bank of India (RBI) on Friday (June 6) reduced the key lending rate, or repo rate, by 50 basis points, bringing it down to 5.5 per cent from 6 per cent.
The decision was announced after the central bank’s Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, concluded its three-day meeting that began on June 4.
This is the third rate cut in a row, following a 25 basis point reduction in April.
This has come amid widespread expectations of a third consecutive rate cut to propel economic growth against the backdrop of trade tensions triggered by Trump tariffs.
Also read | Will RBI’s MPC go for a 'jumbo' repo rate cut, as SBI suggests?
The central bank reduced the key benchmark lending rate (repo) by 25 bps points each in February and April this year on the recommendations of the governor-headed MPC.
In response to the 50-bps cut in the policy repo rate since February 2025, most of the banks have reduced their repo-linked external benchmark-based lending rates (EBLRs) and the marginal cost of funds-based lending rate (MCLR), according to an assessment by the RBI.
A lowering of the repo rate leads reduction in lending rates by banks, which, in turn, brings down EMIs for retail and corporate borrowers.
The MPC consists of three members from the RBI and three external members appointed by the government.
Not the end of easing cycle: Nomura
Governor Malhotra said that the MPC, after reducing the repo rate by 100 basis points, is left with limited scope to boost growth and has thereby changed its stance to neutral.
The MPC is expected to decide on the future course of monetary police only after carefully assessing incoming data and evolving outlook, Malhotra said.
Meanwhile, Nomura predicts the central bank to hold any policy changes in August and follow it up with a 25 basis points rate cut in October and December each.
It, however, states that the policy outlook will depend on the macroeconomic outlook.
“We see downside risks to the RBI’s GDP growth and CPI inflation outlooks,” the financial services company said.
According to Nomura, GDP growth is likely to go down to 6.2 per cent while CPI inflation is tracking at 3.3 per cent. The RBI forecasts a GDP growth of 6.5 per cent in FY26 and has revised the CPI inflation figure to 3.7 per cent.
“Therefore, we do not view today’s action as the end of the easing cycle,” Nomura said, adding that it sees the terminal repo rate at 5 per cent.
(With agency inputs)