RBI slashes repo rate by 50 bps to 5.5%

Cuts retail inflation projection to 3.7%, retains FY26 GDP forecast at 6.5%

- MPOST BUREAU

MUMBAI: Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points on Friday, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy.

The RBI's six-member monetary policy committee, headed by Governor Sanjay Malhotra and consisting of three external members, voted five to one to lower the benchmark repurchase or repo rate by 50 basis points to 5.5 per cent. It also cut the cash reserve ratio by 100 basis points to 3 per cent, adding Rs 2.5 lakh crore to already surplus liquidity in the banking system.

With the latest reduction, the RBI has now cut interest rates by a total of 100 basis points in 2025, starting with a quarter-point reduction in February - the first cut since May 2020 - and another similar-sized cut in April.