CALCULATE YOUR SIP RETURNS

Is RBI Going for 50 Bps Rate Cut: What SBI Report Says?

Written by: Sachin GuptaUpdated on: Jun 3, 2025, 11:49 AM IST
SBI expects the RBI is likely to reduce the repo rate by 50 basis points during its upcoming monetary policy meeting scheduled for June 6.
Is RBI Going for 50 Bps Rate Cut: What SBI Report Says?
ShareShare on 1Share on 2Share on 3Share on 4Share on 5

In its latest economic outlook, the State Bank of India (SBI) forecasts that the Reserve Bank of India (RBI) is likely to reduce the repo rate by 50 basis points during its upcoming monetary policy meeting scheduled for June 6. This expected move is positioned as a proactive strategy aimed at revitalising the decelerating credit cycle and boosting overall economic momentum.

Surplus Liquidity to Back Rate Cut

The report by Soumya Kanti Ghosh, SBI’s Group Chief Economic Adviser, points out that the current banking environment is marked by surplus liquidity. This has accelerated the downward adjustment of deposit rates, with savings account interest rates dipping to 2.70%, and fixed deposit rates declining by 30–70 basis points since February 2025.

"We project a 50-basis point rate cut in the June 2025 policy, as a substantial reduction could help jumpstart the credit cycle," the report notes. SBI also estimates that the cumulative repo rate cut during this easing phase could extend to 100 basis points.

The report further indicates that earlier apprehensions surrounding domestic liquidity and financial stability have eased considerably. Inflation remains well within the RBI's target band, contributing to a favourable backdrop for monetary easing.

Also Read :Best Mutual Fund SIP Plan for June 2025: Motilal Oswal Midcap, Sundaram Mid-Cap and More

SBI on CPI Inflation

Revising its inflation outlook, SBI now expects Consumer Price Index (CPI) inflation to average around 3.5% in FY26. This revision is attributed to optimistic factors such as the India Meteorological Department’s (IMD) above-normal monsoon prediction, improved agricultural output, and falling global crude oil prices.

On the growth front, India’s GDP expanded by 7.4% in Q4 FY25—a slowdown from 8.4% in the same quarter of the previous year. This performance was largely underpinned by robust capital formation, which saw a year-on-year increase of 9.4%.

The SBI report emphasises that preserving and enhancing economic growth should remain the central objective of monetary policy, thereby justifying the case for a deeper rate cut in the upcoming policy cycle.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Jun 3, 2025, 11:49 AM IST

Sachin Gupta

Sachin Gupta is a Content Writer with 6+ years of experience in the stock market, including global markets like the US, Canada, and Australia. At Angel One, Sachin specialises in creating financial content that simplifies complex market trends. Sachin holds a Master's in Commerce, specialising in Economics.

Know More

We're Live on WhatsApp! Join our channel for market insights & updates

Open Free Demat Account!

Join our 3 Cr+ happy customers

+91
Enjoy Zero Brokerage on Equity Delivery
4.4 Cr+DOWNLOADS
Enjoy ₹0 Account Opening Charges

Get the link to download the App

Get it on Google PlayDownload on the App Store
Open Free Demat Account!
Join our 3 Cr+ happy customers