RBI likely to cut repo rate by 50 basis points

The Reserve Bank of India (RBI) may go for a “jumbo rate cut” of 50 basis points on Friday to reinvigorate the credit cycle and counterbalance uncertainties, said the SBI research report.

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The RBI’s Monetary Policy Committee (MPC) will start deliberations on the next bi-monthly monetary policy on June 4 and announce the decision on June 6.

It reduced the key interest rate (repo rate) by 25 bps each in February and April, bringing it to 6 per cent. The six-member MPC, headed by RBI Governor Sanjay Malhotra, also decided to change the stance from neutral to accommodative in its April policy.

“We expect a 50-basis point rate cut in June 25 policy as jumbo rate cut could act as a counterbalance to uncertainty,” said the research report by the SBI’s Economic Research Department, Prelude to MPC Meeting: June 4-6, 2025.

It further said a large rate cut could reinvigorate a credit cycle.