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The Reserve Bank of India (RBI) cut its policy repo rate by 50 basis points, from 6.00% to 5.50%, on June 6, 2025. The Monetary Policy Committee (MPC) said lower expected inflation gave it room to support growth. That was the decision then—not the current policy signal: on October 7, 2026, the RBI raised the rate by 25 basis points to 5.50% and changed its stance to calibrated tightening.
What did the RBI decide in June 2025?
At its 55th meeting, held June 4–6 under Governor Sanjay Malhotra, the MPC reduced the repo rate by 50 basis points, effective immediately. One basis point is one-hundredth of a percentage point. The cut took the rate from 6.00% to 5.50%. The RBI also set the standing deposit facility (SDF) rate at 5.25%, and the marginal standing facility (MSF) rate and Bank Rate at 5.75% in its June 2025 rate-change circular.
The June decision did not have unanimous support on the size of the cut: five MPC members voted for 50 basis points, while Saugata Bhattacharya preferred a 25-basis-point reduction. The Committee also moved its policy stance from accommodative to neutral, saying it would assess incoming data and the outlook before deciding its next steps. The June 6, 2025 MPC resolution records the vote and stance.
Why did the MPC cut the repo rate by 50 bps?
Inflation had eased, with the outlook also improving
The RBI reported that consumer price index (CPI) inflation was 3.2% year over year in April 2025, which the MPC described as a nearly six-year low. The decline was led by food inflation. The Committee also pointed to softer expected food and core inflation, easing commodity prices, and expectations of a normal monsoon. It noted that weather uncertainty and trade-related concerns remained risks.
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For FY2025–26, the RBI lowered its CPI inflation projection from 4.0% to 3.7%, assuming a normal monsoon. India’s medium-term CPI inflation target is 4%, with a tolerance band of plus or minus 2 percentage points, according to the June resolution. The projection was a forecast, not a guarantee that inflation would reach that level.
The RBI wanted to support growth
The MPC said growth remained below its aspirations in a challenging global environment and that easing policy could support domestic private consumption and investment. It projected real GDP growth of 6.5% for FY2025–26, with risks described as evenly balanced. The resolution also reported the National Statistical Office’s provisional estimate of 7.4% real GDP growth in Q4 of FY2024–25; that figure was an NSO estimate, not an RBI-produced statistic.
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The Committee called the larger cut a way to front-load support for growth as the inflation outlook improved. In its words, “This changed growth-inflation dynamics calls for not only continuing with the policy easing but also frontloading the rate cuts to support growth.” That explains the RBI’s stated reasoning; it does not establish that the rate cut caused later growth or inflation outcomes.
What does a repo rate cut mean for borrowers?
The repo rate is an RBI policy rate, not the interest rate on a particular person’s home loan or other borrowing. A policy cut can influence borrowing costs, but the June announcement alone does not show whether, when, or by how much an individual lender will change a customer’s rate or EMI.
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For a specific loan, check the lender’s notice and the loan agreement for its interest-rate benchmark, repricing terms, and timing. Do not assume that a 50-basis-point repo cut means your loan rate or EMI will fall by the same amount. The MPC decision does not establish bank-specific pass-through or an individual payment change.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why is the repo rate still 5.50% in October 2026?
The same numerical rate can reflect a different policy decision. In its resolution dated October 7, 2026, the RBI said the MPC unanimously raised the repo rate by 25 basis points to 5.50% and changed its stance to calibrated tightening. It cited inflation pressures, including food, fuel and core indicators, alongside a resilient domestic economy. The MPC stated: “The MPC also decided to change the stance to calibrated tightening.”
So the June 2025 rate was reached through a cut intended to support growth amid a lower inflation outlook; the October 2026 rate followed a hike amid inflation pressures. The later decision does not mean the earlier cut remained the current policy signal.
As of October 7, 2026, the RBI’s policy-rates page listed the repo rate at 5.50%, SDF at 5.25%, and MSF and Bank Rate at 5.75%. These are date-specific rates, not a description of the direction or stance of the June 2025 decision.
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