The Reserve Bank of India (RBI) has lowered the repo rate by 50 basis points, bringing it down to 5.5%. This decision was made during the RBI’s Monetary Policy Committee (MPC) meeting held from June 4 to 6, led by Governor Sanjay Malhotra.
This cut in the repo rate is good news for people with long-term loans like home loans, as it may lead to lower EMIs (monthly payments).
Governor Malhotra said that even though the global economy is facing challenges, India’s economy is doing well. He added that India’s strong financial sector and growing economy offer good opportunities for both local and international investors.
He also said inflation has come down and is now under control. The RBI now expects retail inflation to be 3.7% for the current financial year, lower than the earlier forecast of 4%. Government data shows inflation dropped to 3.16% in April from 3.34% in March.
Economic conditions in the country look positive. People are spending more, private consumption is healthy, and industrial activity is picking up. The services sector is also doing well, and rural demand is stable while urban demand is rising.
The RBI has kept its GDP growth forecast unchanged at 6.5% for this financial year. The expected growth for each quarter is:
- April to June: 2.9%
- July to September: 3.4%
- October to December: 3.9%
- January to March: 4.4%
In addition to the repo rate cut, the RBI also lowered the Cash Reserve Ratio (CRR) by 100 basis points. This move will release ₹2.5 lakh crore into the banking system, helping banks have more funds to lend. CRR is the amount of money banks must keep with the RBI.
Governor Malhotra also mentioned that India remains a strong investment destination, with foreign exchange reserves standing at $691 billion—enough to cover more than 11 months of imports.
In the previous MPC meeting held in April, the RBI had already cut the repo rate by 25 basis points—from 6.25% to 6%.
