Mumbai, June 6, 2025: In a bold and growth-supportive move, the Reserve Bank of India (RBI) has announced a 50 basis point cut in the repo rate, exceeding market expectations. This significant reduction aims to reinforce the ongoing macroeconomic momentum amid easing inflationary pressures.
Mr. Raghvendra Nath, Managing Director of Ladderup Asset Managers, shared his insights on the development:
“With prices continuing to ease, RBI has cut the repo rate by 50 basis points in a move aimed at supporting the current macroeconomic momentum. This is twice the reduction that most economists had anticipated.”
Despite the rate cut, the RBI has maintained its FY26 real GDP growth forecast at 6.5%, citing persistent geopolitical uncertainties that could affect global trade dynamics. However, inflation is expected to moderate further to 3.7%, aided by the early onset of the kharif season, providing further comfort to the central bank’s policy stance.
In a parallel move to support liquidity, the RBI has also announced a gradual reduction in the Cash Reserve Ratio (CRR) — to be executed in four equal tranches of 25 basis points each over the course of the year.
“The RBI’s decision to gradually reduce the CRR is likely to enhance liquidity in the system and lower the cost of funds for banks,” Mr. Nath added. “This should translate into lower borrowing costs, supporting private investment and domestic consumption in the coming quarters.”
The twin actions of rate cut and CRR reduction signal the RBI’s intent to ensure sustained economic growth while maintaining inflation within its target range.
About Ladderup Asset Managers:
Ladderup Asset Managers is a leading investment advisory firm offering comprehensive asset management and wealth creation strategies, catering to a wide range of individual and institutional investors.
