RBI Slashes Repo Rate By 50 Bps To 5.5%, Marks Third Straight Cut In A Row
This marks the RBI’s second monetary policy decision for the current financial year, following a three-day meeting of the Monetary Policy Committee that commenced on Wednesday
In its second policy review of the 2025-26 financial year, the Reserve Bank of India’s Monetary Policy Committee (MPC) has cut the repo rate by 50 basis points, lowering it from 6 per cent to 5.5 per cent for the third time in a row. The decision was announced by RBI Governor Sanjay Malhotra on Friday.
In addition to the rate cut, the MPC revised its policy stance to ‘neutral’ from ‘accommodative,’ indicating a stronger commitment to fostering economic growth in the face of shifting conditions. The move came at the conclusion of a three-day meeting that began on Wednesday.
"Indian economy growing at a very fast pace, we are making all efforts to grow even faster in our vision of Viksit Bharat. Indian economy offers immense opportunities to investors. Indian economy presents strength, stability and opportunity amid global concerns, said RBI Guv.
The repo rate, the benchmark interest rate at which the central bank lends to commercial banks, had already been reduced by 25 basis points in both February and April. While most analysts expected a similar 25-bps cut in this round, a research report from the State Bank of India had forecast a more aggressive reduction of 50 basis points.
Third Rate Cut
Since February 2025, the Reserve Bank of India has cut the policy repo rate by a cumulative 50 basis points. In response, most banks have revised their repo-linked external benchmark lending rates (EBLRs) and marginal cost of funds-based lending rates (MCLR), effectively lowering borrowing costs for consumers. These adjustments have translated into reduced EMIs for both retail and corporate borrowers.
The latest policy review comes against the backdrop of easing inflation. Data from the Ministry of Statistics and Programme Implementation shows retail inflation fell to 3.16 per cent in April, down from 3.34 per cent in March, comfortably below the RBI’s 4 per cent target. This downward trend has strengthened expectations of a more accommodative approach from the central bank.
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