RBI's Strategic Shift: Historic Rate Cuts to Drive Economic Growth

The Reserve Bank of India announced significant monetary policy changes in June, including a 50 basis point reduction in the repo rate to 6.5% and a shift to a neutral policy stance. These measures aim to inject liquidity into the banking system and stabilize inflation and GDP projections.

The Reserve Bank of India's June monetary policy, unveiled by Governor Sanjay Malhotra, heralds a period of strategic realignment with the reduction of the repo rate by 50 basis points to 6.5%.

This move shifts the monetary policy stance from accommodative to neutral, aiming to provide substantial liquidity by reducing the Cash Reserve Ratio by 100 basis points, thereby injecting Rs 2.5 lakh crore into the banking system.

Additionally, the RBI adjusted its inflation forecast downwards by 30 basis points to 3.7% for FY26, while maintaining its GDP projection at 6.5%, emphasizing a sustainable outlook for India's economic growth.

(With inputs from agencies.)