RBI bi-monthly MPC review: Repo rate cut by 50 bps to 5.5%; stance changed to ‘neutral’

The Reserve Bank of India in its second bi-monthly monetary policy review in the backdrop of favourable macros on expected lines reduced repo rate cut by 50 basis points to 5.5 per cent.1 basis point is one-hundredth of a percentage point.

This is a total 100 basis point reduction from February 2025.

The June MPC review came at a time when the economy has achieved a one-year high in growth with a six-year low in consumer inflation, while markets stare at the end of a 90-day pause on America’s reciprocal tariffs on most of its trade partners due next month. 

Zee Business poll anticipated 80 per cent chances of a 25 bps rate cut, while the chances for status quo and 50 bps rate cut were at 0 per cent and 20 per cent, respectively.

In the April review, the MPC also decided to switch to an “accommodative” stance from “neutral”.

An accommodative stance indicates the RBI’s intent to lower the key lending rate, whenever possible, while striking a balance between economic growth and retail inflation. Repo rate is the key interest rate at which the central bank lends short-term funds to commercial banks.

Morgan Stanley remained overweight on India, expects two RBI rate cuts this year

Jonathan Garner, Chief Asia and Emerging Markets Equity Strategist at Morgan Stanley remaining overweight on India – anticipated two rates this year- with the first rate cut as early as this week.“We think two rate cuts, one likely this week, and one in the second half of the year,” Garner said  on the sidelines of the Morgan Stanley Annual India Investment Conference in Mumbai.