RBI Could Implement 75 Bps Rate Cut In 2025, With Quarterly Reductions: Report

The Indian corporate sector showed resilience amid economic fluctuations, with around 4,000 listed companies reporting a 6.2 per cent increase in revenue for Q3 FY25

India's consumer price index inflation fell to a seven-month low of 3.6 per cent in February 2025, primarily due to a significant drop in food prices

Source : PTI

SBI Research's Ecowrap forecasts a 75-basis-point rate cut for this fiscal year. Experts predict that CPI inflation will reach 3.9 per cent in the fourth quarter of FY25, averaging 4.7 per cent for the entire year. Looking ahead to FY26, inflation is expected to stay between 4.0 per cent and 4.2 per cent, with core inflation ranging from 4.2 per cent to 4.4 per cent.

Based on this trend, analysts expect at least a 75-basis-point rate cut during the current cycle, with consecutive reductions likely in April and June 2025. Another round of rate cuts may occur in October 2025, states the report.

"With benign inflation this month and going forward, we expect a cumulative rate cut over the cycle could be at least 75 basis points, with successive rate cuts in next policy April and June 2025. With an intervening gap in Aug'25, the rate cuts cycle could restart from October 2025," the report added.

CPI Inflation

India's consumer price index (CPI) inflation fell to a seven-month low of 3.6 per cent in February 2025, primarily due to a significant drop in food prices.

Food and Beverages inflation eased to 3.84 per cent due to a significant drop in vegetable prices. Notably, vegetable inflation turned negative for the first time in 20 months, driven by major price declines in garlic, potatoes, and tomatoes.

Experts suggest that the MahaKumbh festival may have contributed to reduced garlic consumption, while fruit prices rose due to higher demand during fasting periods, as per the report.

Despite the overall inflation slowdown, imported inflation has surged, rising from 1.3 per cent in June 2024 to 31.1 per cent in February 2025. This increase is largely driven by higher prices for precious metals, oils, and chemicals. The depreciation of the rupee could further exacerbate inflationary pressures in the coming months.

Industrial Production

Meanwhile, India’s industrial production (IIP) posted strong growth of 5 per cent in January 2025, up from 3.2 per cent in December 2024. The manufacturing sector led the way with a 5.5 per cent increase, while mining grew by 4.4 per cent. However, cumulative growth from April 2024 to January 2025 stood at 4.2 per cent, lower than the 6 per cent recorded in the same period last year.

The Indian corporate sector showed resilience amid economic fluctuations, with around 4,000 listed companies reporting a 6.2 per cent increase in revenue for Q3 FY25. EBITDA grew by 11 per cent, and profit after tax (PAT) rose by 12 per cent compared to the previous year. Sectors such as Capital Goods, Consumer Durables, FMCG, Healthcare, and Pharmaceuticals saw strong growth, states the report.

With lower inflation, an anticipated rate cut, and solid corporate performance, India's economy appears on a stable trajectory. However, rising imported inflation and global economic uncertainties remain critical factors to monitor in the coming months.