RBI MPC June 2025: Rate Cut Hopes and What It Means for the Economy

The Reserve Bank of India's Monetary Policy Committee (MPC) kicked off its three-day meeting on Tuesday, June 3, 2025, in Mumbai. Led by RBI Governor Sanjay Malhotra, the committee will announce its policy decision this Friday, June 6, at 10:00 AM IST. You can catch it live on the RBI's YouTube channel, social media platforms, and across major financial news outlets.

A Rate Cut on the Horizon?

Markets are betting on a 25-basis-point cut in the repo rate from 6.25% to 6.00%. Why? Inflation has eased significantly, dropping to just 3.16% in April, the lowest it's been in six years and well under the RBI's 4% target. A recent Reuters survey supports this view: 53 out of 61 economists expect the rate cut, seeing low inflation as an opportunity to ease monetary policy slightly.

If the RBI goes ahead, it would be the third straight cut this year, following similar moves in February and April. That pattern shows the central bank is serious about helping the economy weather global uncertainty.

How's the Economy Doing?

India's economy remains robust. In the first quarter of 2025 (January–March), GDP grew by 7.4%, the fastest rate since early 2024. This was primarily thanks to solid growth in construction and manufacturing.

Still, there's a note of caution. The RBI has trimmed its full-year growth forecast for FY2025 to 6.6%, down from 7.2%, citing global challenges and some domestic headwinds. For FY2026, they expect a slight increase to 6.7%, driven by hopes of a regular monsoon season, which is expected to boost farm output and rural demand.

Markets Reacting Already

Investors appear to be pleased with what they're hearing. On Wednesday, June 4, the Sensex rose by 261 points, and the Nifty crossed the 24,600 mark, snapping a three-day losing streak. The buzz around lower interest rates has made markets hopeful; cheaper borrowing means more investment and, ideally, stronger growth.

In the currency markets, the Indian rupee may see some modest gains this year, but it's lagging behind other Asian currencies. Even with substantial GDP growth, the rupee declined by about 0.3% against the U.S. dollar in 2025. Experts say this is partly due to RBI's efforts to smooth out volatility and some global caution about emerging markets, especially with geopolitical tensions still simmering.

What's the RBI's Game Plan?

The RBI is expected to maintain a 'neutral' stance for now, aiming to strike a balance between growth and inflation control. Governor Malhotra has emphasised that their approach will be timely, well thought out, and communicated. That way, markets and the economy stay aligned.

Their decision isn't just about what's happening in India; it also factors in global trends, ongoing geopolitical issues, and how volatile commodity prices are shaping up. The goal is steady growth without letting inflation get out of hand.

Wrapping It Up

As the MPC wraps up its meeting, the spotlight is squarely on Friday's big announcement. A rate cut would send a clear message: the RBI is staying ahead of the curve, ready to support the economy through whatever lies ahead. For businesses, investors, and everyday consumers, the decision will shape everything from loan rates to market confidence in the months to come.