NEW DELHI: Reserve Bank of India is expected to cut the repo rate by 50 basis points (bps) in its upcoming June 6 policy meeting, according to a recent State Bank of India report.“We expect a 50-basis point rate cut in June’25 policy as a large rate cut could reinvigorate a credit cycle” the report said.The SBI report further suggested that could help revive the credit cycle, with the total rate cut during the easing phase possibly reaching 100 basis points.The report indicates that the banking system currently operates with surplus liquidity conditions. This situation has resulted in faster repricing of liabilities during the ongoing rate-easing period. Financial institutions have reduced savings account interest rates to a minimum of 2.70 per cent.Furthermore, financial institutions have decreased fixed deposit (FD) rates by 30-70 bps since February 2025. The analysis indicates that deposit rates will continue to respond significantly to rate reductions in subsequent quarters.SBI reports that concerns regarding domestic liquidity and financial stability have diminished. The inflation rate is anticipated to stay within the RBI’s acceptable range.Considering these circumstances, the analysis suggests that sustaining economic growth should be the primary objective of monetary policy, supporting the rationale for a significant rate reduction.Regarding economic performance, India’s GDP increased by 7.4 per cent in the fourth quarter of FY25, compared to 8.4 per cent in the corresponding quarter of the previous fiscal year. This growth was primarily driven by increased capital formation, showing a 9.4 per cent year-on-year rise.The SBI report also highlighted several positive signs, including the IMD’s forecast of an above-normal monsoon, good crop arrivals, and declining crude oil prices. These factors led SBI to lower its CPI inflation estimate for FY26 to around 3.5%, with a downward trend.The report added that higher expected household savings, as noted in the RBI’s latest annual report, should be sufficient to support India’s growth without triggering demand-driven inflation in FY26.