The Reserve Bank of India’s Monetary Policy Committee on Friday delivered the steepest rate cut in 5 years, which was a larger-than-expected move. This RBI repo rate cut 2025 move comes along with growing concerns pertaining to ongoing global economic uncertainty and the slowing economic momentum. Furthermore, the central bank has altered its policy stance from ‘accommodative’ to ‘neutral.’ This indicates the reduced scope for further easing. This is the third straight cut by the Monetary Policy Committee this year which has taken the repo rate to 5.50 percent. According to RBI Governor Sanjay Malhotra, this sharper-than-anticipated cut was aimed to front-load policy support amid a volatile global environment.
Repo Rate Cut: Reduced by 50 basis points from 6.00% to 5.50% – third consecutive cut since February 2025.
Standing Deposit Facility (SDF): Adjusted to 5.25%.
Marginal Standing Facility (MSF) & Bank Rate: Revised to 5.75%.
Objective: Front-loaded cut aims to boost credit growth, lower borrowing costs, and stimulate economic activity.
Changed from ‘Accommodative’ to ‘Neutral’.
Indicates a data-dependent approach going forward.
Governor Malhotra: "Very limited space left to support growth" after cumulative 100 bps cuts since Feb 2025.
Focus now on balancing price stability and growth support amid global uncertainties.
Real GDP Growth Forecast Retained at 6.5%.
Quarterly breakup:
Q1: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%
Headwinds Identified: Geopolitical tensions, global trade disruptions, weather-related risks
CPI Inflation Forecast Revised Down to 3.7% (from 4.0% earlier).
Quarterly breakup:
Q1: 2.9%
Q2: 3.4%
Q3: 3.9%
Q4: 4.4%
Drivers of Lower Inflation: Easing global commodity prices, stable core inflation, and assumption of a normal monsoon.
CRR reduced by 100 bps, from 4% to 3%, in four tranches of 25 bps each starting September 2025.
Expected Liquidity Infusion: ₹2.5 lakh crore by end-November 2025.
Aim: Lower banks’ funding costs, enhance lending capacity, and support credit flow.
RBI to continue monitoring:
Stress in unsecured loans & credit card portfolios – showing signs of improvement.
Persistent stress in the microfinance sector.
Current Account Deficit (CAD) – maintaining FY26 within sustainable levels.
Moderation in net FDI, while ensuring India remains an attractive investment destination.
Commitment to Financial Stability: Proactive steps promised to support smooth financial system functioning.
The overall policy package reflects a strategic pivot by the RBI, balancing an aggressive stance on rate cuts to invigorate growth with a shift to a more cautious, data-dependent policy stance. The aim is to ensure financial stability while providing ample liquidity to support economic expansion
“A hawkish Deep rate cut by RBI : Front loading of rate cuts by RBI addresses the need to spur growth as short end rates come down aggressively which in turn will assist corporate borrowing through capital markets for the short end. The growth expectations remained at 6.5% for FY26 and inflation expectations lowered to 3.7%. However we see a large curve steepening as long end rates remain relatively unchanged with RBI stance changing to neutral from accommodative. This implies that further room to cut rates remain limited and data dependent. A balanced policy encouraging growth. Fixed deposit rates to come down sharply as banks transmit this rate cut. Investors should look at 2-3y corporate bonds for their portfolio as they continue to offer good spreads over government and FD rates and interest rates will come down more gradually for corporate bonds.”
"The RBI's decision to implement a third consecutive rate cut and revise its stance to 'neutral' reflects a proactive approach to support economic momentum amidst global uncertainties. A 50 bps reduction in the repo rate will help in bringing down home loan interest rates further, which is a welcome move for homebuyers and the real estate industry. Lower inflation expectations and a stable GDP outlook will give confidence to developers and investors alike. We believe this move will play a crucial role in reviving housing demand and sustaining growth in the sector."
“We are pleased with the RBI’s decision to cut the repo rate by 50 basis points, marking a hat-trick of rate reductions in 2025. This move is both timely and well-calibrated, especially in light of ongoing global economic headwinds. Lower interest rates, along with the revised inflation outlook, offer significant support to real estate buyers — particularly in metropolitan cities like Mumbai, where financial accessibility greatly influences decision-making. The RBI’s continued 'neutral' stance signals its commitment to maintaining flexibility in supporting macroeconomic stability, which is a reassuring indicator for long-term investors.”
"The RBI’s bold move to cut the repo rate by 50 bps while shifting the policy stance to ‘neutral’ comes as a booster shot for sectors like real estate that are sensitive to interest rate movements. This will significantly improve consumer sentiment and reduce the cost of borrowing, thereby accelerating housing demand, especially in mid-income and affordable segments. We appreciate the RBI’s continued efforts to balance inflation control with the need to maintain economic momentum amidst global uncertainties."
"The RBI’s third straight rate cut, along with a shift to a ‘neutral’ stance, reflects its agility in navigating the evolving global and domestic macroeconomic landscape. With the repo rate now at 5.50%, we foresee an uptick in home buying activity driven by improved affordability. The revision in inflation projections to 3.7% is also encouraging and gives confidence in the RBI’s forward-looking policy framework. Such measures are crucial in reinforcing consumer trust and sustaining growth in India’s housing market, particularly in cities like Mumbai."
“The twin reduction of the repo rate by 50 basis points to 5.50% and cash reserve ratio by 100 basis points to 3% respectively by the RBI provides significant relief for homebuyers across the country. This bold move by the apex bank comes at a crucial time when inflation is easing, and the economy requires strong stimulus to sustain growth. Lower borrowing costs will make home loans more affordable, thereby encouraging more buyers to enter the market. The reduction in CRR is expected to infuse significant liquidity in the banking system, which will prompt banks to lend even more.”
“The demand for mid and premium segment homes has already been on the rise following previous rate cuts, and this larger reduction will further accelerate interest from both homebuyers and investors. Additionally, the positive market sentiment around the possibility of further rate cuts this financial year bodes well for the real estate sector, paving the way for sustained growth and renewed confidence in the housing market.”
“The Reserve Bank of India’s decision to cut the repo rate by 50 basis points, along with a 100 basis points reduction in the Cash Reserve Ratio (CRR) to 3 percent, is a strong and timely measure to support the real estate sector and other industries. With today's policy changes, interest rates have now fallen by 100 basis points from last year's level.”
“We welcome this decision with open arms, as a reduced repo rate translates to lower borrowing costs, while the CRR cut will enhance liquidity in the banking system. Together, these steps will encourage homebuyers to make property investment decisions. Moving forward, this move will have a ripple effect on demand in the coming months across different segments of homes, ultimately contributing to sustained growth and increased confidence in the real estate market.”
“The RBI’s decision to slash the repo rate by 50 basis points and the CRR by 100 bps is clearly aimed at fueling consumption and accelerating investment, especially with inflation remaining within the central bank’s comfort zone. With today’s MPC outcome, the repo rate now stands at 5.50%, marking a cumulative reduction of 100 basis points over three sequential rate cuts. This move paves the way for commercial banks to lower their lending rates, making credit more affordable and further boosting demand for real estate.”
“With several scheduled commercial banks already offering home loans below 8 percent, today’s decision may lead to a broader transmission of lower rates across the lending ecosystem. This will not only ease the financial burden on borrowers but also enhance affordability across housing segments, offering significant relief to homebuyers and providing a timely push for those planning property purchases.”
“The significant 50 basis points cut in the repo rate, shows RBI’s focus to spur economic growth. This is the third consecutive rate cut by the central bank in 2025. The committee has signalled a recalibrated approach by shifting its policy stance from ‘Accommodative’ to ‘Neutral’, amid evolving economic dynamics. Also, another major move to enhance liquidity in the banking systems and stimulate credit growth is a cut in CRR by 100 bps, from 4% to 3%. These decisions come at a time when retail inflation at 3.16% is lowest since July 2019 and gives the central bank room to support economic momentum. The increased liquidity and push for economic growth could also stimulate demand for insurance products as businesses expand and consumers have more disposable income.”
“A rate cut is always a mixed bag, depending on which side of the table you’re on. For borrowers, especially those with home, car, or personal loans on floating rates, it’s welcome news, your EMIs might come down a little, which always helps. It can also encourage more people to take loans, whether it’s to buy a home or fund personal needs. But for savers, especially those who rely on fixed deposits, it may mean slightly lower returns going forward. So, if you're planning to lock in a good FD rate, this might be the right time. All in all, it’s a signal that the RBI is trying to support growth while still being mindful of inflation and financial stability.”
“The RBI’s decision to keep the repo rate unchanged at 6.50% for the eighth consecutive time underscores its resolve to achieve price stability while supporting economic growth. For the healthcare financing sector, this pause ensures predictability in capital costs for lending partners, which is critical for delivering affordable credit products to patients and their families. India’s healthcare system still faces a massive financing gap, with out-of-pocket expenditure accounting for nearly 48% of total health expenditure. At CarePal Money, we are witnessing strong demand for 0% interest medical loans—not just for planned treatments but increasingly for emergency and reimbursement financing. The RBI’s cautious stance, supported by moderating inflation and resilient GDP growth, creates a stable environment for NBFCs, fintechs, and lending marketplaces like ours to expand healthcare credit penetration. Furthermore, the continued liquidity support measures and emphasis on financial inclusion provide the structural tailwinds necessary to scale our impact across Tier II and III cities, where medical financing needs are the most acute. As the central bank works towards anchoring inflation closer to the 4% target, households can better plan for medical contingencies without the fear of rising borrowing costs.”
“Lowering the repo rate to 5.25% represents a definitive shift by the RBI to further stimulate growth considering the declining inflation, now 3.2%. This is good news for home loan borrowers. A lower repo rate usually means reduction in the lending rates and thus, both existing and new borrowers stand to benefit from lower EMIs. For example, a 20-year home loan of ₹50 lakh would see monthly EMIs shrink by more than ₹1,500, which amounts to a total saving of nearly ₹4 lakh over the loan period, if the rate is cut by 0.50%. But, other depositors might have to bear the brunt of further cuts in the Fixed Deposit rates which would impact income from interest especially for the Retired. As a more prudent approach, it would be better to allocate some of the money into investments that offer returns above inflation while protecting the principal. They may also consider prepaying some of the loan, or increasing the EMI marginally to shorten the duration of the loan, thereby lowering the interest paid. With the RBI changing stance to Neutral, future cuts will be more data driven, thus it might be a good time to secure lower rates or revise repayment plans.”
