Reserve Bank Implements Bold Cuts in June Monetary Policy

The Reserve Bank, led by Governor Sanjay Malhotra, has announced significant changes in its June monetary policy. The repo rate was reduced by 50 basis points, and a 100 basis points cut to the Cash Reserve Ratio was made to infuse liquidity. Renewed inflation projections are more favorable.

The Reserve Bank of India, under Governor Sanjay Malhotra's leadership, has unveiled its June monetary policy with significant measures aimed at stimulating economic growth. The central bank has made a decisive move by reducing the benchmark lending rate by 50 basis points, setting the repo rate at 5.5 percent, shifting its stance from accommodative to neutral.

The policy changes also include a considerable cut of 100 basis points in the Cash Reserve Ratio, poised to inject Rs 2.5 lakh crore liquidity into the banking system. This influx is expected to enhance the availability of funds, thereby supporting financial institutions and encouraging lending activities.

Furthermore, the Reserve Bank has adjusted its retail inflation forecast downward by 30 basis points, setting a new estimate of 3.7 percent for the fiscal year 2026. Despite a decrease in foreign exchange reserves, which dipped slightly from USD 692.7 billion to USD 691.5 billion, the outlook for inflation remains favorable, and the Gross Domestic Product projection for FY26 is retained at 6.5 percent, indicating sustained economic stability.

(With inputs from agencies.)