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RBI’s Monetary Policy (June 06, 2025): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on June 06, 2025. Here are some of the highlights of the monetary policy announcement.

Rates

 

ChangeRate
Policy repo rateReduced by 0.50%5.50%
Standing deposit facility (SDF) rate5.25%
Marginal standing facility (MSF) rate5.75%
Bank rate5.75%

Monetary policy stance

  • Monetary policy stance was changed from ‘accommodative’ to ‘neutral’.

Domestic Economy 

  • The Indian economy presents a picture of strength, stability, and opportunity. The 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace. 
    • First, strength comes from the strong balance sheets of the 5 major sectors - corporates, banks, households, government, and the external sector. 
    • Second, there is stability on all 3 fronts – price, financial, and political – providing policy and economic certainty. 
    • Third, the Indian economy offers immense opportunities to investors through 3Ds – demography, digitalisation and domestic demand. 
  • The provisional estimates released by the National Statistical Office (NSO) placed India’s real Gross Domestic Product (GDP) growth in 2024-25 at 6.5%.
  • Real GDP growth for 2025-26 is projected at 6.5%.
  • Headline Consumer Price Index (CPI) inflation moderated to a nearly 6-year low of 3.2% (y-o-y) in April 2025.
  • CPI inflation for the financial year 2025-26 is projected at 3.7%.
  • As on May 30, 2025, India’s foreign exchange reserves stood at US$ 691.5 billion, sufficient to fund more than 11 months of goods imports and about 96% of external debt outstanding.
  • Cash reserve ratio (CRR) will be reduced by 100 basis points (bps) to 3.0% of net demand and time liabilities (NDTL) in four equal tranches of 25 bps each with effect from the fortnights beginning September 6, October 4, November 1 and November 29, 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market.
  • Credit Deposit ratio for the banking system at the end of December 2024 was at 81.84%, broadly similar to a year ago.
  • Weighted Average Call Rate (WACR), on an average, traded 16 bps below the policy repo rate during April-June (up to June 4) as compared to 6 bps above the repo rate during February-March.


References

Reserve Bank of India. (2025, June 06). 'Governor’s Statement: June 6, 2025'. Retrieved from https://website.rbi.org.in/web/rbi/-/press-releases/governor-s-statement-june-6-2025


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