Anticipated RBI Rate Cut to Spur Economic Growth

India Ratings and Research expects the RBI's monetary policy committee to cut the benchmark interest rate by 25 basis points in the April 2025 meeting to boost growth. Higher inflation previously led to rate hikes, but moderated inflation may allow for gradual easing in fiscal 2025-26.

The Reserve Bank of India's (RBI) monetary policy committee is predicted to lower the benchmark interest rate by 25 basis points during its April 2025 policy review, according to India Ratings and Research (Ind-Ra). This move aims to stimulate economic growth.

Ind-Ra's Chief Economist, Devendra Kumar Pant, noted that headline inflation is expected to ease to 4.7% in fiscal year 2025, with potential rate cuts totaling a maximum of 75 basis points in fiscal 2026. The RBI previously tightened policy due to high inflation, raising the rate by 250 basis points between May 2022 and February 2023.

The RBI is set for six meetings in the next fiscal year, starting April 1, with the first scheduled between April 7-9. Ind-Ra predicts three rate cuts in fiscal 2026, amounting to 75 basis points, which, along with the February 2025 cut, could lower the repo rate to 5.5% with steady inflation at 4%.

(With inputs from agencies.)