RBI Cuts Repo Rate by 50bps to 5.50%, CRR Trimmed by 100bps in Pro-Growth Move 6i572r

By-AKSHAT GARG – AVP, Choice Wealth

In a surprising move, the RBI slashed the repo rate by 50 bps to 5.50% and trimmed the CRR by 100 bps, while pivoting its stance from “Accommodative” to “Neutral.” This marks the third rate cut in 2025, signaling a decisive pro-growth push.

With inflation at a multi-year low (April I at 3.16%) and FY26 projections dialed down to 3.7%, the RBI found comfort in cutting deep. Governor Malhotra called it “front-loading ” amid global headwinds and tepid domestic demand.

A phased CRR cut—spread over four tranches—will release ₹2.5 lakh crore into the system, aiming to turbocharge credit flow and ease funding costs.

Markets initially cheered: Nifty Bank hit new highs, realty stocks soared, and bond yields dipped. But broader indices gave up gains, reflecting caution over future policy room. The rupee slipped slightly amid global divergence.

The real estate and consumption story just got a boost—home EMIs are set to fall, and auto demand may rev up. But banks must walk a fine line on deposit rates.

The RBI may pause here. Future moves will depend on the monsoon, inflation trajectory, and global risks. For now, it’s stimulus with a side of restraint.