On June 6, 2025, the RBI cut the repo rate by 50 bps and CRR by 100 bps, triggering a market rally. Bank Nifty hit a new high, while sectors like auto, real estate and MSMEs are expected to benefit.
On June 6, 2025, the Bank Nifty index surged to a record high of 56,597.45, gaining 836 points or 1.5% by 11:39 AM, after the Reserve Bank of India (RBI) delivered a surprise 50 basis point repo rate cut to 5.50%. This marks the third consecutive rate cut since the appointment of the new RBI Governor, indicating a strong pivot toward supporting economic growth amid easing inflation.
The central bank also shifted its stance to ‘neutral’ and announced a staggered 100 bps reduction in the Cash Reserve Ratio (CRR), bringing it down to 3%. Inflation has eased significantly, with CPI falling from 6.2% in October 2024 to 3.2% in April 2025. GDP growth guidance remains steady at 6.5%.
Banking stocks rallied in response. IDFC First Bank jumped 5.49%, Axis Bank rose 3.9%, while Kotak Mahindra Bank, AU Small Finance Bank, and HDFC Bank each gained over 1%.
The RBI’s 50 bps repo rate cut and 100 bps CRR reduction will directly benefit homebuyers and developers. Lower EMIs will boost affordability, while reduced borrowing costs will help developers access capital and speed up project completions, especially in the affordable and mid-income housing segments.
Banks and NBFCs are likely to see increased credit demand due to higher liquidity and lower lending rates. Sectors like auto, MSMEs, and infrastructure may experience improved financing conditions. The bank margins could be under pressure in the short term despite long-term growth benefits.
Historically, this is not the first time the RBI has pursued a cycle of consecutive three-rate cuts. A similar pattern was observed in 2019 when the central bank cut the repo rate four times consecutively to address a slowing economy:
This context highlights that the current easing cycle is part of the RBI’s historical approach to counter economic slowdowns and stimulate demand.
As of 11:42 AM, the Sensex climbed 770 points to 82,219, and the Nifty 50 advanced 250 points to the 25,000 mark. The latest policy stance reaffirms the RBI's growth-supportive approach in a controlled inflation environment, echoing its past playbook.
Disclaimer: The article is for informational purposes only and not investment advice.
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