RBI to Cut Repo Rate by 25 bps? Here's What Experts Say!

The Reserve Bank of India (RBI) is expected to reduce the repo rate by 25 basis points this week, as lower inflation and global uncertainties strengthen the case for an accommodative monetary policy. The 54th meeting of the Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, begins deliberations on April 7, with a decision due on April 9, 2025.

In February, the RBI slashed the repo rate by 25 bps to 6.25%, marking the first cut since May 2020. The rate had been held steady at 6.5% since February 2023.

Chief Economist at Bank of Baroda, Madan Sabnavis, said the upcoming credit policy is being shaped amid global turbulence, including new U.S. tariffs. President Donald Trump recently announced tariffs ranging from 11% to 49% on exports from 60 countries, including India and China, effective April 9.

Sabnavis anticipates a 25 bps rate cut, supported by stable inflation and improved liquidity. He also expects a shift in policy stance to "accommodative," signaling more cuts could follow.

ICRA echoes this view, predicting a 25 bps cut while maintaining a neutral stance. It expects the RBI to continue liquidity interventions but rules out any major announcements like a CRR cut.

Retail inflation eased to a seven-month low of 3.61% in February, down from 4.26% in January, giving the RBI more room to act.

Industry experts believe a rate cut could stimulate demand. Pradeep Aggarwal, Chairman of Signature Global, said lower rates could drive home buying and boost economic growth. However, he emphasized that real impact depends on how quickly banks pass on the benefit to borrowers.

Meanwhile, industry body Assocham advised caution, suggesting a wait-and-watch approach as recent liquidity measures are yet to show results.

With inflation under control and global trade tensions rising, all eyes are on the RBI’s policy decision.