RBI’s Aggressive Rate Cut in June 2025: What It Means for India’s Economy

In an important decision to stimulate economic growth, the Reserve Bank of India (RBI) cut the repo rate by 50 bps in June 2025, decreasing from 6.50% to 6.00%. It signaled the central bank’s strong commitment to support domestic demand amid a backdrop of moderating inflation and global uncertainty. This was the largest rate cut in five years. The repo rate plays a crucial role in deciding interest rates across the banking system; it is the rate at which the RBI lends money to commercial banks. It encourages spending and investment because a reduction in this rate typically leads to lower loan EMIs for consumers and reduced borrowing costs for businesses.