India's central bank beats market expectations to deliver outsized rate cut of 50 points
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Reserve Bank of India Cuts Repo Rate by 50 Basis Points to 5.5%
Above: Reserve Bank of India (RBI) governor Sanjay Malhotra arrives for a press conference after the monetary policy review at RBI headquarters in Mumbai on June 6, 2025. Image copyright: Indranil Mukjherjee/Contributor/AFP via Getty Images
The Spin
Narrative A
The RBI's decisive rate cut demonstrates exceptional monetary leadership, finally abandoning its overly cautious stance that has long stifled growth. With inflation plummeting to six-year lows and economic headwinds intensifying, this bold move signals the central bank's belated recognition that aggressive action — not timid incrementalism — is essential for India's prosperity and domestic demand revival.
Narrative B
While the RBI's surprise 50-basis-point cut signals bold intent, India's economic revival demands far more than monetary wizardry alone. Rate cuts remain impotent without robust bank transmission, vibrant credit demand, and genuine structural reforms. Betting everything on cheaper money while ignoring deeper growth fundamentals is a dangerous delusion that history repeatedly punishes.