RBI cuts Repo Rate to 5.5%: Perosnal & Home Loan repayers to Benefit from low EMIs
New Delhi, 6 June 2025: The Reserve Bank of India (RBI) has reduced the repo rate by 50 basis points, bringing it down from 6% to 5.5%. The decision was taken at the RBI’s bi-monthly Monetary Policy Committee (MPC) meeting held from June 4 to 6, 2025, under the chairmanship of RBI Governor Sanjay Malhotra.
This rate cut is expected to lower EMIs for long-term loans, offering major relief to home loan borrowers. Reserve Bank of India (RBI) has made this decision when inflation shows a steady decline. Retail inflation for the current financial year is now projected at 3.7%, down from the earlier estimate of 4%. Government data revealed that inflation fell to 3.16% in April from 3.34% in March.
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Governor Malhotra pointed to uncertain global trade forecasts, but the Indian economy continues to perform strongly. India remains an attractive destination for both domestic and foreign investments.
Additionally, the RBI has also reduced the Cash Reserve Ratio (CRR) by 100 basis points, releasing Rs 2.5 lakh crore into the banking system to improve liquidity. The CRR is the portion of total bank deposits that must be maintained with the RBI in liquid form.
The central bank maintained the GDP growth projection at 6.5% for the financial year 2025–26, with quarterly estimates of 2.9% in Q1, 3.4% in Q2, 3.9% in Q3, and 4.4% in Q4. The services sector is expected to maintain its rise, while industrial activity and discretionary spending are on a gradual rise. Rural demand remains stable, and urban demand is improving steadily.
India’s forex reserves currently stand at a strong $691 billion, enough to cover over 11 months of goods imports, reflecting a stable and strong economy amid global instability.
