In a major policy move, the Reserve Bank of India's Monetary Policy Committee (MPC) reduced the repo rate by 50 basis points to 5.5%, down from 6%. This marks the third consecutive rate cut, following two earlier reductions of 25 basis points each in February and April.

Alongside the rate cut, the central bank also revised its policy stance from "accommodative" to "neutral," signaling a more balanced approach to future monetary actions.

Consequently, the Standing Deposit Facility (SDF) rate now stands at 5%, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been adjusted to 5.75%.

The aggressive rate cut comes on the back of easing retail inflation, which has dropped well below the RBI’s medium-term target of 4%. RBI Governor stated that India's economy remains an attractive investment destination, driven by favorable demographics, accelerating digital adoption, and robust domestic consumption.

This latest rate cut also follows the release of GDP data for the fourth quarter and the full financial year 2024-25. While Q4 GDP growth exceeded expectations at 7.4%, the full-year growth moderated to 6.5%—a four-year low—though it was in line with the government's second advance estimates.