RBI MPC begins, likely to go for 25 bps rate cut on April 9, says SBI report

IANS April 7, 2025 277 views

The Reserve Bank of India's Monetary Policy Committee is set to potentially reduce interest rates by 25 basis points in its upcoming meeting. SBI Research forecasts a comprehensive rate cut strategy, anticipating around 100 basis points reduction in the repo rate over the next fiscal year. Inflation is expected to moderate, with projections showing a decline to 3.8% in Q4 FY25. The economic outlook suggests surplus liquidity and a strategic approach to managing monetary policy in the coming months.

"Factoring in the average inflation envisaged and the output gap consequent upon different GDP scenarios, a cumulative policy rate reduction of 75-100 bps is likely going forward" - SBI Research Report
RBI MPC begins, likely to go for 25 bps rate cut on April 9, says SBI report
Mumbai, April 7: As the Reserve Bank of India (RBI) began its Monetary Policy Committee (MPC) meeting (from April 7-April 9) here, SBI Research on Monday said it expects a 25-basis point rate cut in the policy and cumulative rate cut over the cycle could be at least 100 basis points, with two successive rate cuts over February and April.

Key Points

1

- RBI MPC meeting begins with potential 25 bps rate cut

With an intervening gap in June, the second round of rate cuts could start from August, said the SBI report.

"During February 2025 to March 2026, we expect at least 100 bps cut in repo rate (25 bps already cut in February 2025 and another 75 bps rest of FY26), which will transmit exactly same to EBLR and 60 bps in MCLR," the report mentioned.

The report further stated that based on the available estimates of natural rate the neutral nominal policy rates works out at 5.65 per cent.

"Factoring in the average inflation envisaged and the output gap consequent upon different GDP scenarios, a cumulative policy rate reduction of 75-100 bps is likely going forward," it added.

The RBI MPC decision announcement is scheduled for release on April 9, which will provide key insights into the Reserve Bank's policy stance and India's economic outlook.

CPI inflation may come down to 3.8 per cent in Q4 FY25 and average to 4.6 per cent in FY25.

Average CPI inflation may come to 3.9-4.0 per cent in FY26 and core inflation should come around in the range of 4.2-4.3 per cent.

"Till September/October, headline inflation will be on downward trajectory but may increase thereafter. The US has imposed reciprocal tariff to many economies that is more than India's. This will increase the fear of dumping into India by these countries resulting in lower inflation," said the report.

Moreover, durable liquidity is likely to remain surplus in FY26, supported by several factors, like OMO purchase, RBI's dividend transfer, BOP surplus of around USD 25-30 billion in FY26, the report mentioned.

Reader Comments

P
Priya K.
This is great news for home loan borrowers! A 100 bps reduction over the cycle would make a significant difference in EMIs. Hope the banks pass on the full benefit to customers. 🤞
R
Rahul S.
While rate cuts sound good, I'm concerned about inflation creeping back up later in the year. RBI needs to be careful not to overstimulate the economy.
A
Anjali M.
The detailed analysis in this report is impressive! The 3.8% CPI projection for Q4 is optimistic but achievable if monsoon behaves. Fingers crossed!
S
Sanjay P.
Respectful criticism: The article could have explained what EBLR and MCLR mean for common readers. Not everyone understands banking terminology.
N
Neha T.
As a small business owner, lower interest rates would be a huge relief! The last 2 years have been tough with high borrowing costs. This could really help with expansion plans.
V
Vikram J.
Interesting how global factors like US tariffs might affect our inflation. Shows how interconnected economies are these days. RBI has a tough balancing act!

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
RBI Monetary Policy Committee Rate Cut SBI Research Inflation Economic Outlook
You May Like!