RBI desires to go extremely calibrated on future repo rate actions: Experts

The October policy saw the stance getting changed to neutral (vs. withdrawal of accommodation). This was followed with 50bps of CRR reduction in December, plethora of liquidity supporting measures in January and now a 25bps of repo rate reduction in February 2025.

"We interpret the neutral stance as the RBI desire to go extremely calibrated on future repo rate actions, given the change in global dynamics, where the markets have significantly dialled down quantum of rate cuts by the US Fed in 2025," said Mittal.

The fact that stance is neutral, it means that everything that transmit between now and April -- Q3 FY25 GDP data, global dynamics, currency, crude, March heat waves -- will matter.

"We are expecting 50bps of rate cutting cycle," Mittal said, adding that liquidity will play much larger role.

In a big relief for banks, RBI Governor Sanjay Malhotra announced that the implementation of the proposed Liquidity Coverage Ratio (LCR), as well as project financing norms, will be deferred by a year and will not be implemented before March 31, 2026.

"A key announcement for banks concerned the postponement of the LCR guidelines implementation, now scheduled for no earlier than April 1, 2026, and to be rolled out in a phased manner," said Mittal.

Additionally, the RBI indicated that more time would be needed to finalise project financing norms and expected credit loss rules.

According to Ajay Kumar Srivastava, Managing Director and CEO, Indian Overseas Bank, with the inflation rate expected to moderate further in FY26 and GDP growth estimated at 6.7 per cent, "we believe this rate cut will provide a boost to the economy and stimulate investment and consumer demand, fostering overall economic momentum".

"We also appreciate the RBI's focus on enhancing digital security in the banking and payments system," he added.