India Markets Edge Higher As RBI Cuts Repo & CRR, Projects Lower Inflation

The Reserve Bank of India (RBI) has cut repo rates by 50 basis points on Friday, June 6, from 6% to 5.50% – marking its third consecutive rate cut this year. 

And in a major boost for banks, it has also announced a 100 basis point cut in the Cash Reserve Ratio (CRR), bringing it down from 4% to 3%.  This is expected to release ₹2.5 lakh crore of liquidity into the banking system by the end of November 2025.

However, the MPC noted that the scope for further policy accommodation is limited and has changed its policy stance from 'accommodative' to 'neutral.'

Indian equity markets responded positively to the announcements. Benchmark indices rose by nearly 1%, while the Nifty Bank index surged 0.8%  to hit a fresh record high.  

This policy decision, taken by the Monetary Policy Committee (MPC), adjusts the Standing Deposit Facility (SDF) rate to 5.25% and the Marginal Standing Facility (MSF) and Bank Rate to 5.75%.

The central bank has revised its FY26 Consumer Price Index (CPI) inflation forecast down to 3.7% from the original 4%. The quarterly projections show a gradual increase in inflation throughout the fiscal year, starting at 2.9% in Q1 and reaching 4.4% in Q4.

Meanwhile, the GDP growth forecast for the fiscal year 2026 is at 6.5%. The quarterly GDP growth estimates remain unchanged, with projections of 6.5% for Q1FY26, 6.7% for Q2, 6.6% for Q3, and 6.3% for Q4.

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