The Reserve Bank of India's Monetary Policy Committee (MPC) concluded its meeting today, June 6, 2025, implementing significant measures to stimulate economic growth and manage inflation.

Key Decisions 

1. Repo Rate Reduction: The MPC reduced the repo rate by 50 basis points, bringing it down to 5.5%, marking the third consecutive rate cut this year. 
2. Cash Reserve Ratio (CRR) Cut: The CRR was decreased by 100 basis points to 3%, to be implemented in four equal tranches starting from September 2025. This move aims to infuse approximately ₹2.5 lakh crore into the banking system. 
3. Policy Stance Shift: The MPC changed its policy stance from 'accommodative' to 'neutral', indicating a balanced approach between supporting growth and controlling inflation. 
4. Inflation Outlook: The inflation forecast for FY26 was lowered to 3.7% from the earlier projection of 4%, reflecting confidence in price stability. 
5. GDP Growth Projection: The real GDP growth forecast for FY26 was maintained at 6.5%, with quarterly projections as follows: Q1 at 6.5%, Q2 at 6.7%, Q3 at 6.6%, and Q4 at 6.3%. 

Implications

• Borrowers: The reduction in the repo rate is expected to lead to lower lending rates, providing relief to borrowers through decreased EMIs.
• Banking Sector: The CRR cut will enhance liquidity, enabling banks to increase lending activities and support economic growth.
• Investors: The policy measures have positively impacted the stock market, with sectors like real estate and financials witnessing gains. 

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