RBI Cuts Interest Rates by 0.5%, But Banks Passing Only Partial Benefit

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is set to meet from June 4 to June 6, 2025. This meeting is crucial for investors, banks, and the general public. RBI has already reduced the repo rate twice — by 0.25% each in February and April 2025 — bringing it down to 6%.

Will RBI Cut Interest Rates for the Third Time?

There is growing speculation that the RBI may go for a third consecutive rate cut. If this happens, loans such as home, car, and corporate loans could become even cheaper, offering significant relief to the common man. The repo rate is the rate at which RBI lends short-term money to commercial banks, and any cut directly impacts EMIs and borrowing costs for consumers.

Why Has RBI Been Cutting Rates?

The rate cuts are aimed at controlling inflation and boosting economic growth. According to the RBI’s Annual Report for 2024–25, inflation is projected to remain around 4%, which opens the door for further rate cuts.

Mixed Opinions from Experts for June 2025 MPC

• Experts believe that with inflation under control, there's a possibility of another rate cut.
• However, global uncertainties due to trade wars and tariffs under the Trump administration may prompt RBI to take a cautious stance.
• RBI has set a GDP growth target of 6.5% for FY 2025–26, which also supports a possible rate cut.
• Barclays Chief Economist Aastha Gudwani believes RBI may avoid further cuts due to international instability.

Overall, the June 2025 MPC meeting will be closely watched for indications on the direction of interest rates and the broader economic outlook.