After the Monetary Policy Committee (MPC) meeting, RBI governor Sanjay Malhotra declared that the RBI had lowered its benchmark repo rate by a more than anticipated 50 basis points to 5.50 percent.

Since muted inflation freed up officials to concentrate on promoting economic growth, this is said to be the third straight decline.

Beginning with a quarter-point cut in February—its first since May 2020—it has lowered rates by 100 basis points in 2025. In April, it made a cut of the same size.

According to Sanjay Malhotra, inflation has considerably decreased and is now comfortable with falling inside the four percent objective set by the central bank. Additionally, core inflation is anticipated to stay low.

According to Malhotra, India is already expanding quickly but hopes to do so even faster.

In recent months, retail inflation has fallen more swiftly than anticipated. In April, it fell to 3.16 percent, which is close to a 6-year low and far below the RBI's medium-term target of four percent.

With GDP growth soaring to 7.4 percent in the January–March quarter, India's economy has proven resilient.

 

“Affordability improves significantly, especially for the aspiring middle class and upwardly mobile buyers,” said Gaurav K Singh, Chairman of Womeki Group.

In rapidly expanding micromarkets where planned projects provide flexible and aspirational living, he thinks this will increase demand.

For the time being, experts perceive the RBI has fulfilled its role; the true test will be how quickly and completely banks communicate these reduction to borrowers.

The RBI has changed its policy stance from "accommodative" to "neutral," indicating that the central bank may pause here despite the dramatic rate reduction.

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How inflation and the state of the world economy develop will probably determine future course of action.