RBI Expected to Cut Repo Rate 3rd Time by 25 Basis Points in June 2025 MPC Meet: What It Means for Borrowers
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RBI is anticipated to announce its third consecutive repo rate cut by 25 basis points when the Monetary Policy Committee concludes its three-day meeting on June 6, 2025. This would mark the third consecutive rate cut in 2025, reinforcing the central bank’s ongoing efforts to maintain a supportive liquidity stance amid moderating inflation and slowing GDP growth.
Why Another Rate Cut?
According to economists, a combination of slowing economic growth and contained inflation gives the RBI enough room to continue easing its monetary policy. India’s GDP growth for FY25 dropped to 6.5%, down from 9.2% in the previous year. However, the March quarter GDP surprised on the upside, registering a 7.4% growth rate, indicating resilient pockets of economic activity. Meanwhile, inflation has remained within the central bank’s target of 4%, strengthening the case for further rate reductions. In April 2025, the RBI had already reduced its repo rate–the rate at which it lends to banks—by 25 basis points to 6%.
Expert Opinions: Why Economists Are Confident
Madan Sabnavis, Chief Economist at Bank of Baroda, expects another 25 bps rate cut, citing the comfortable liquidity situation and benign inflation environment. “We believe the RBI will go ahead with another cut and may revise growth and inflation forecasts while also assessing global risks, particularly the potential impact of the expiry of the US tariff reprieve in July,” he said.
A Prasanna from ICICI Securities echoes this view, noting that substantial Q4 GDP numbers support moderate monetary easing. “A 25 bps cut along with an accommodative stance gives the MPC flexibility to react to data surprises in either direction,” he added. The RBI has already worked to ease financial conditions by ensuring abundant liquidity in the system. This has been achieved through rupees infusions and by refraining from its usual liquidity-absorbing the measures in the money markets.
Barclays, CRISIL Forecasts: More Easing Ahead?
Barclays economist Aastha Gudwani noted that Q1 growth exceeded expectations, led by a resurgence in manufacturing and a surge in capital expenditure, even though consumption remains weak. The full-year GDP growth stands at 6.5%, consistent with RBI’s forecast.
Rating agency CRISIL anticipates that the RBI may reduce the rates by an additional 50 basis points in FY25, citing favorable macroeconomic tailwinds. These include:
- An above-normal monsoon forecast by the IMD (106% of the long-period average),
- Lower global crude oil prices expected to average $65–$70 per barrel, compared to $78.8 last year,
- Improved rural demand and controlled food inflation.
What This Means for Borrowers
If the expected rate cut materializes, borrowers can look forward to:
- Lower home loan EMIs,
- Reduced car and bike loan interest rates,
- Increased affordability for personal loans.
With the repo rate already at 6% and further cuts anticipated, it’s an opportune time to explore loan options through platforms like Loan Bazaar, where borrowers can compare interest rates, use EMI calculators, and access quick approvals.
Final Thoughts
If the RBI goes ahead with another repo rate reduction, it may result in more affordable interest rates for home, car, and personal loans. This could ease the repayment burden for borrowers through lower EMIs (Equated Monthly Installments). Additionally, the banking sector is expected to maintain strong liquidity levels, encouraging new credit disbursals across sectors.
At Loan Bazaar, we continue to track the latest RBI monetary policy updates, loan interest rate changes, and economic developments that matter to our users. Stay tuned for real-time analysis and tools to calculate how changes in the RBI repo rate impact your monthly loan payments.