Latest Repo & Reverse Repo Rates 2025
The RBI (Reserve Bank of India) has recently updated the Repo rate while keeping the reverse Repo rates unchanged in May 2025. The Repo rates refer to the rate at which the central bank lends money to commercial banks, helping them maintain liquidity in case of a shortage of funds. Whereas the Reverse Repo rates refer to the rates at which the RBI borrows money from commercial banks to maintain excess of liquidity in the market.
Latest Update on Repa Rate in 2025Â
The last cut on the Repo rates was done on the 9th of April 2025. The repo rate was reduced by 25 basis points, bringing it down to 6%. This was the second rate cut this year, when the rates were cut in February 2025.
A similar reduction was made in February 2025 when the rates were cut by 25 BPS. After two successive cuts, the repo rate is brought down to 6%. The members of the Monetary Policy Committee (MPC) stated that lower lending rates would encourage investment and stimulate demand, strengthening overall economic activity. In the past six months, the repo rate has reduced by 50 basis points (bps).
| Effective Date | Repo Rate |
| May 2025 | 6.00% |
| 9 April 2025 | 6.00% |
| 7 February 2025 | 6.25% |
| 6 December 2025 | 6.50% |
| 9 October 2025 | 6.50% |
Impact of Repo Rate Cut
The repo rate cuts positively impact the borrowers as it decreases the interest rates, and Equated monthly Instalments on home, vehicle, and personal loans will decrease. The borrowers will be able to pay the debts easily.
Investors who are making investments in fixed deposits may face a crunch as the cuts in repo rate take FD interest rates downward, signalling a negative sign for investors. Easy lending at lower rates is available for commercial banks; therefore, they offer low interest rates on fixed deposits.
The Repo rates negatively impact the stock market as they are inversely related to each other. Increased repo rate means lending for businesses becomes costlier, and businesses will significantly reduce spending, which may cause the stock market prices to go down due to a lack of investments and reduced spending.
Inflation and repo rate are closely related to each other, as when inflation rises in the market, the government takes measures to increase the repo rate, making borrowing difficult for businesses, negatively impacting their purchasing power and spending. Therefore, whenever inflation rises, the government increases the repo rate.
The overall impact of the repo rate on the economy is significant and plays a major role in securing stability. It is the major tool for the government to keep track and hold as well on the financial development in the domestic markets. Repo rates become an important tool in times of critical financial shuffling happening all around the world.
Latest Update on Reverse Repo Rates in 2025
The Reverse Repo Rate refers to the rate at which the government or the RBI borrows money from commercial banks. Such actions are taken by the RBI when there is excess liquidity in the market. In times of high inflation, the government focuses on increasing the reverse repo rates so that the excess liquidity from the market can be extracted and the inflation can be brought to back.
At present, the reverse repo rate has remained unchanged at 3.35%. There are no major updates on the reverse repo rate as the RBI has not announced any significant changes in recent times. The rates are unchanged as of May 2025. It is to see how long they are going to remain unchanged.
Difference Between Repo Rate & Reverse Repo Rate
| Repo Rate | Reverse Repo Rate |
| The rate at which the RBI lends money | The rate at which the RBI borrows money |
| Always higher than the reverse repo rate | Lower than the repo rate |
| Important in times of inflation and a deficiency of funds | Used for managing cash flow in the market, to curb high cash flow |
| Involves the sale of securities later repurchased | Involves the transfer of money from one account to another |
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