Everything You Need to Know About Deposits

The Reserve Bank of India (RBI) plays a pivotal role in managing inflation and guiding economic growth through its monetary policy tools. One of the most important tools among them is the repo rate. By lowering the cost at which banks borrow from the central bank, the RBI aims to encourage lending, stimulate investment, and boost consumption.

On June 6, 2025, the RBI reduced the repo rate by 50 basis points to 5.50%. This strategic move reflects the central bank’s switch to a more ‘neutral’ policy stance.

The Reserve Bank of India (RBI) holds significant influence over the Indian economy, particularly through its monetary policy decisions. Whether it’s controlling inflation, encouraging investment, or supporting growth, the RBI’s stance on interest rates can steer the economy in different directions. The RBI regularly adjusts its monetary policy to reflect the prevailing economic conditions, and the decisions made often lead to changes in the repo rate, which affects borrowing costs for individuals and businesses alike.

The repo rate and inflation targeting are central to India’s economic strategy, serving as key tools for the Reserve Bank of India (RBI) to manage inflation and keep the economy stable. Through its monetary policy, the RBI aims to keep inflation within a set target range to ensure price stability, which supports long-term growth. The link between the repo rate and inflation targeting is crucial: by changing the repo rate, the RBI influences borrowing costs, which affect demand for goods and services and, in turn, the overall inflation rate.

The Reserve Bank of India (RBI) has cut the repo rate by 50 basis points to 5.50% in its June 2025 Monetary Policy Committee meeting. This marks the third consecutive reduction since February. The RBI has also shifted its policy stance from ‘accommodative’ to ‘neutral,’ reflecting a calibrated approach to balance growth and inflation. This move comes amid easing inflation pressures and aims to sustain economic momentum while addressing emerging global volatilities.

Following two successive 25 basis point cuts earlier this year, the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) slashed the repo rate by 50 basis points to 5.50% in its June 6 meeting.

A steeper cut than widely anticipated, this decision brings the cumulative easing to a substantial 100 basis points. This year. The MPC also lowered the cash reserve ratio (CRR) by 100 basis points in tranches starting September, injecting further liquidity into the system.

In today’s highly interconnected global economy, decisions made by central banks in one region can send ripples across borders, impacting financial systems worldwide. For India, the repo rate — a critical monetary policy tool used by the Reserve Bank of India (RBI) — is not an isolated decision.

As the Reserve Bank of India’s Monetary Policy Committee (MPC) concluded its meeting on June 6, 2025, the central bank delivered a widely watched policy move: a 50 basis point cut in the repo rate, bringing it down to 5.50%. This marks the third consecutive reduction this year, underscoring the RBI’s intent to support economic growth amid a backdrop of subdued inflation and persistent global uncertainties

The repo rate in India is a reflection of the country's evolving economic strategies and monetary policy adjustments over time. Between 2010 and 2025, repo rate trends have mirrored the broader shifts in inflation control, global economic pressures, and domestic financial stability measures.

In this blog, we explore the repo rate changes during this 15-year period, offering a detailed look into how India’s financial framework has responded to various economic stimuli.

The repo rate is a key tool used by the Reserve Bank of India (RBI) to manage the country’s economy. It is the interest rate at which the RBI lends money to commercial banks, affecting how much it costs for banks to borrow and lend money. By changing the repo rate, the RBI controls inflation, regulates the money supply and supports economic growth. Understanding how the repo rate works helps explain its wider impact on the economy through the monetary policy transmission process.

The Reserve Bank of India (RBI)’s, April 2025 Monetary Policy Statement projected inflation easing to 3.2% (well within the 4% target) and signaled continued accommodative policy to support growth, implying further deposit rate softening in coming quarters.