RBI Monetary Policy Meeting Repo Rate Announcements June 2025 LIVE Updates: Governor Sanjay Malhotra announced a repo rate cut of 50 bps, dropping to 5.5 percent after the MPC meeting.
Malhotra said the comfortable liquidity surplus in the banking system has further reinforced transmission of policy repo rate cuts to short term rates. “However, we are yet to see a perceptible transmission in the credit market segment, though we must keep in mind that it happens with some lag,” he said.
Lower rates will spur the retail demand especially for affordable housing. Good monsoon coupled with lower rates augurs well for agriculture sector. It will drive consumption and will boost rural demand. “MSMEs, which are vital to India’s economy, will see improved cash flow and more room to grow,” Kumar said.
RBI MPC Meeting Repo Rate Announcements Live Updates: – The Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) cut the repo rate for a third consecutive time by 50 basis points to 5.5 per cent. Announcing the decision, Governor Sanjay Malhotra also said that the inflation outlook for FY26 has been revised to 3.7 per cent, from the earlier 4 per cent. The MPC also retained the GDP growth forecast for the current fiscal year at 6.5 per cent, stating that “geopolitical tensions and weather vagaries pose headwinds”.
What to expect after repo rate reduction:– After a slash in the repo rate by 50 bps, it is expected that all external benchmark lending rates (EBLR) linked to it will decline by a similar margin. As observed in past trends, in February 2025, most banks reduced their rates by the same magnitude. Further, rate cut is likely to benefit the bond market, as falling interest rates typically lead to a rise in bond prices.
CPI declines to 3.7 percent:– As per the RBI Governor’s announcement, the MPC estimated CPI inflation for 2025-26 to be at 3.7 percent, lower than the 4 percent estimated earlier. The real GDP growth for 2025-26 is projected at 6.5 per cent. For the financial year 2024-25, the growth rate stood at 6.5 per cent, which was a four-year low.
Stocks to buy#
At present, domestic brokerages including Axis Securities prefer banks with promising growth prospects, healthy deposit franchises, stable asset quality metrics, and strong and steady management teams.
“From a banking sector perspective, the pick-up in credit growth which has been subdued as banks exit FY25 remains pivotal. Hopes are pinned on a possible recovery in H2FY26 supported by falling interest rates, expectations of a strong monsoon, consumption boost from the tax rate cut and potential recovery in demand for the unsecured segments as stress subsides,” said Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS.
“Asset Quality concern appears to be steadily waning with unsecured segment stress showing gradual signs of stability, while the secured segment asset quality continues to hold up well. We continue to prefer the larger private banks and our picks would be HDFC Bank, ICICI Bank and Kotak Bank amongst the larger private banks and City Union Bank amongst the mid-sized banks,” added Kulkarni.
Here are the top stock picks:
Private Banks – HDFC Bank, Kotak Mahindra Bank, ICICI Bank, City Union Bank, AU Small Finance Bank, and Ujjivan Small Finance Bank
PSU Banks – SBI, Bank of Baroda, and Canara Bank
NBFCs – Shriram Finance, Chola mandalam Inv & Finance, Bajaj Finance and SBI Cards.
Benchmark stock market indices closed higher on Friday, gaining nearly 1% after seeing a rally due to the RBI’s rate cut of 50 bps, boosting market sentiment. The central bank also announced a reduction in the CRR by 1%
Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings Ltd, said that the RBI’s Monetary Policy Committee (MPC) exceeded expectations by slashing the Repo rate by 50 basis points.
Bajaj Finance emerged as the top performer, surging an impressive 4.93%, followed by Axis Bank which climbed strongly by 3.15%. Maruti Suzuki India Limited also showed robust performance, gaining 2.64%, while IndusInd Bank rose 2.50%. Bajaj Finserv rounded out the top five gainers with an increase of 2.36%.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.