The State Bank of India (SBI) projects that the Reserve Bank of India (RBI) may implement a 50 basis points (bps) reduction in the repo rate during its upcoming RBI monetary policy meeting on June 6, 2025. This anticipated “jumbo” rate cut is seen as a strategic move to stimulate credit demand and sustain economic momentum, especially as inflation remains under control.
SBI’s report highlights that the Indian banking system currently possesses ample liquidity, facilitating the effective transmission of monetary policy decisions to deposit and lending rates. Many banks have already reduced savings account interest rates to as low as 2.70%, and fixed deposit rates have been cut by 30–70 bps since February 2025.
Inflation remains within the central bank’s comfort zone, allowing policymakers to shift focus toward boosting growth. India’s GDP grew by 7.4% in the fourth quarter of FY25, underpinned by a robust 9.4% year-on-year rise in capital formation, indicating positive signs for future economic activity.
Adding to the optimistic outlook, the Indian Meteorological Department (IMD) has forecast an above-normal monsoon for the year, which is expected to support rural demand and overall economic growth.
The RBI’s monetary policy decision on June 6 is highly anticipated, with attention on how it might further stimulate the economy amid evolving conditions.
