At a time when the global markets are witnessing massing selling pressure amid US recession fears after President Donald Trump’s tariff announcement.
The Reserve Bank of India’s Monetary Policy Committee (RBI MPC) is set to conduct its three-day interest rate review meeting between Monday and Wednesday. The MPC decision will be announced on the last day of the meeting on Wednesday, April 9. According to analysts, the RBI MPC is expected to cut the key repo rate by another 25 basis points (bps) to 6 per cent.
In the previous monetary policy review meeting in February 2025, the central bank had cut the repo rate by 25 basis points, which was the first interest rate reduction since COVID times (May 2020), to 6.25 per cent.
According to analysts, the February 2025 CPI inflation print falling well below 4% has cemented the expectation of a back-to-back 25 bps rate cut in the April 2025 MPC meeting.
The RBI MPC meeting will take place between April 7 and April 9, 2025, and the interest rate decision will be announced by RBI Governor Shaktikanta Das at 10 am on April 9, the last day of the meeting.
In February, India’s CPI inflation slowed ot a seven-month low of 3.61 per cent on the back of ease in the prices of food and protein-rich items.
Aditi Nayar, chief economist of ICRA, said, “The February 2025 CPI inflation print falling well below 4% has cemented the expectation of a back-to-back 25 bps rate cut in the April 2025 MPC meeting. This may be followed by another 25 bps repo rate cut either in the June 2025 or the August 2025 meetings, dependant in large part on the next GDP growth print for Q4 FY2025.”
A basis point (bp) is a 100th of a percentage point.
The RBI has been tasked to keep retail inflation at 4 per cent with a margin of 2 per cent on either side. The central bank cut the key repo rate by 25 basis points last month on easing concerns on the inflation front.
Sujan Hajra, chief economist and executive director, Anand Rathi Group, said, “Easing food prices, coupled with lower global crude oil prices, have provided a supportive backdrop for inflation to align more closely with the RBI’s 4 per cent target. Against this backdrop, the RBI, which recently cut the repo rate by 25 bps and implemented liquidity measures to address the system’s deficit, is likely to maintain its easing cycle.”
Garvit Tiwari, director and co-founder of Gurugram-based property consulting firm InfraMantra, also echoed similar views saying the RBI is expected to further go ahead with another 25-bps cut in repo rate.
“The decline in inflation and improvement in GDP has given RBI the headroom to go for another round of rate cut,” Tiwari added.
How Will The Rate Cut Benefit Borrowers?
If the RBI decides to cut its key policy rate by 25 basis points (bps) on April 9, the equated-monthly instalments (EMIs) of home loan, personal loan and auto loans will come down.
The amount of reduction will depend upon the individual banks as to how much they pass on the rate cut on MCLR-based floating loans. ICRA’s Nayar said, “We are apprehensive that tight liquidity conditions may delay transmission of policy rate cuts to bank deposit and lending rates.”
Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate focussed Alternative Investment Fund (AIF), said a low-interest rate regime augurs well for economic growth. With inflation falling, the RBI must focus on accelerating growth amid the global headwinds.
“Going for 25 bps rate cut will stimulate demand and give a spur to consumer spending across sectors including housing which off late is witnessing some moderation after going through historic highs in the past couple of years,” he added.
Vijay Harsh Jha, founder and CEO of property brokerage firm VS Realtors, said, housing sales have shown signs of moderation and are marginally above the 1 lakh unit threshold in top 9 cities partially as a result of rising home prices.
“We expect RBI to take cognizance of this fact and initiate a 25-50 bps cut in interest rate in order to take some burden off the homebuyers and encourage fence-sitters to enter the market,” Jha said.