New Delhi, June 10 , 2025.

The RBI Governor Sanjay Malhotra-led MPC decided to cut the repo rate by a bumper 50 basis points (bps) to 5.50% from 6.00%. This was higher than the Street estimates, and RBI’s third consecutive repo rate cut. RBI Governor also announced taht the MPC  decided to change policy stance to ‘Neutral’ from ‘Accommodative’. The MPC also cut the Cash Reserve Ratio (CRR) by 100 bps to 3% from 4% earlier.

The RBI now focuses on the transmission mechanism, which has been slow to start with and is still not significantly visible for the credit markets. The CRR cuts, that is expected to release ₹2.5 trillion, serves as an assurance to the markets on RBI’s objective towards keeping liquidity adequate. The CRR cuts have been timed to the second half of the year, which is the busy season. The significant CRR reduction would ensure lowering of the cost of funds for the banking system, thereby ensuring transmission of the 100 bps repo rate reduction. Going ahead, we still think there is a chance for a last 25 bps cut, but the timing of the same remains uncertain, said Indranil Pan, Chief Economist – Yes Bank.

Shanti Ekambaram, Deputy Managing Director, Kotak Mahindra Bank, Said “The RBI has made a clear and decisive call to propel economic growth, deploying all key policy levers in a bold and timely manner. By front-loading a 50 basis point repo rate cut and infusing durable liquidity through a 100 basis point CRR reduction, the RBI has demonstrated its commitment to ensuring effective monetary transmission. With inflation softening, liquidity conditions comfortable, and financial stability intact across banks, NBFCs, and corporates, the macroeconomic environment is ripe for sustained growth. The shift to a neutral policy stance signals that while further rate cuts may be limited, the current policy remains sufficiently accommodative. As the Governor rightly emphasized, price stability alone is not enough — a supportive policy framework is essential in uncertain times to nurture growth and build economic momentum”

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank Said “The higher than expected Repo rate cut comes along with a shift in the stance back to neutral. This clearly points towards future decisions being more data dependant given the significant global uncertainties.  Furthermore, the sharp drop in CRR is likely to keep liquidity conditions suitably comfortable to ensure monetary transmission.”

“The RBI has made a clear and decisive call to propel economic growth, deploying all key policy levers in a bold and timely manner. By front-loading a 50 basis point repo rate cut and infusing durable liquidity through a 100 basis point CRR reduction, the RBI has demonstrated its commitment to ensuring effective monetary transmission. With inflation softening, liquidity conditions comfortable, and financial stability intact across banks, NBFCs, and corporates, the macroeconomic environment is ripe for sustained growth. The shift to a neutral policy stance signals that while further rate cuts may be limited, the current policy remains sufficiently accommodative. As the Governor rightly emphasized, price stability alone is not enough — a supportive policy framework is essential in uncertain times to nurture growth and build economic momentum.” Said  Manish Kothari, Group President and Head – Commercial Banking