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.

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.