RBI Monetary Policy Committee Meet: First Policy Review Likely to See 25 bps Repo Rate Cut Amid Easing Inflation

The Reserve Bank of India (RBI) is conducting its bi-monthly monetary policy meeting from Monday, April 7th, to Wednesday, April 9th, 2025. This meeting marks the first monetary policy review for the financial year 2025-26. The Monetary Policy Committee (MPC) of the RBI holds these crucial sessions six times annually to assess and decide on the country's benchmark interest rates, particularly the repo rate, projections on GDP growth and anticipated CPI inflation figures.

Expected Repo Rate Cut - Up to 25 Basis Points

Market expectations suggest that the RBI is likely to reduce key interest rates by as much as 25 basis points during this week's policy announcement. This anticipated move is largely attributed to easing inflation, which provides the RBI with scope for a more accommodative policy approach. Concerns regarding global economic headwinds, especially following the US's announcement of reciprocal tariffs, also play a role in these expectations.

Previous Rate Cut in February - Down to 6.25%

In February, the MPC had already reduced the repo rate by 25 basis points, bringing it down to 6.25 per cent. This February cut was significant as it was the first reduction since May 2020 and the first policy change after a gap of two and a half years. Before this, the RBI had maintained the repo rate at 6.5 per cent since February 2023. The last rate cut prior to February 2025 occurred in May 2020 during the Covid-19 pandemic.

Announcement of Policy Decision - April 9th at 10:00 am

The outcome of the MPC meeting, including any decisions regarding changes to the repo rate, will be made public by RBI Governor Sanjay Malhotra on Wednesday, April 9th, 2025, at 10:00 am. The three-day deliberation of the MPC will conclude with this announcement. The announcement can be seen live on 9th April at RBI’s official Youtube Channel.

Inflation within Target Band

India has generally succeeded in keeping inflation within the RBI's target range of 2–6%, with a medium-term goal of 4%. With inflation relatively under control at 3.61%, the central bank is expected to increasingly focus on promoting economic growth.

Global Economic Factors - US Tariffs Ranging from 11% to 54%

Global economic dynamics are also influencing the RBI's considerations. US President Donald Trump announced significant tariffs, ranging from 11% to 54%, on imports from 60 countries, including India and China. Analysts suggest that this geopolitical development could potentially benefit Indian exporters by creating opportunities in the US market as competitors face higher tariffs. The RBI will need to balance domestic growth priorities with these emerging global trade headwinds.

Future Rate Cut Projections - Potential for 75 Basis Points in 2025

Care Edge Ratings anticipates another 25-basis-point cut in the upcoming policy announcement. Bank of Baroda has even projected a cumulative rate cut of 75 basis points over the course of 2025. The repo rate, currently at 6.25%, is a vital instrument for the RBI in managing liquidity and inflation by determining the rate at which it lends money to commercial banks

Disclaimer: This news is solely for educational purposes.