RBI repo rate: SBI Research expects 1.25% rate cut, starting from June 2025; borrowers to benefit

RBI Repo Rate June 2025 (prediction): The Reserve Bank of India (RBI) is expected to start major cuts in the repo rate starting from its upcoming monetary policy committee meeting (MPC) in June 2025.

According to SBI Research, the central bank may cut the repo rate by 0.75% (75 basis points) in June and August, followed by another 0.5% (50 basis points) cut in the second half of FY 2025-26. By the end of FY26, a total of 1.25% (125 basis points) cut in repo rate is predicted by SBI Research.

"With multi-year low inflation in March and benign inflation expectations going forward, we expect rate cuts of 75 basis points in June and August (H1) and another 50 bps cut in H2 i.e. cumulative cuts of 125 bps going forward while 25 bps rate cut has already been initiated in Feb’25 (that could put the terminal Rate at ~5.0%-5.25% by March 2026)," SBI Research said in its latest report on Monday (May 5, 2025).

"However, we feel, jumbo cuts of 50 bps, could be more effective than secular 25 bps tranches spread over the horizon," SBI Research said in its latest report on Monday (May 5, 2025), it added.

Big relief for borrowers

Banks have already passed on the benefit of the last two repo rate cuts to borrowers. Going forward, all existing as well as aspiring borrowers can expect cheaper home and car loans.