RBI MPC Meeting Highlights: Central Bank Announces 25 Bps Rate Cut, GDP Growth Projected At 6.5% For FY26
RBI MPC April 2025 Highlights: Follow this space for all the latest news and updates on the RBI MPC meet, chaired by Governor Sanjay Malhotra, which will reveal its final decision on key rates today
Background
RBI MPC April 2025 Highlights: All eyes are on the Reserve Bank of India (RBI) as Governor Sanjay Malhotra prepares to announce the central bank’s first monetary policy decision of the new financial year today. The three-day meeting of the Monetary Policy Committee (MPC) began on Monday. There is widespread anticipation that the panel will choose to implement a 25 basis point cut in the repo rate.
The Governor is expected to reveal the committee's final decision today at 10 AM. Notably, the policy announcement will coincide with the start of a 26 per cent reciprocal US tariff on Indian exports, a move expected to have far-reaching trade consequences.
This meeting is also the first MPC for Poonam Gupta, who was recently appointed the Deputy Governor of the central bank. With over two decades of experience working at the IMF and World Bank, Gupta is the first female to hold the post of Deputy Governor in the RBI in over a decade.
In its last meeting in February, the MPC reduced the repo rate by 25 basis points to 6.25 per cent, marking the first rate adjustment in nearly three years. Many market watchers believe the RBI could announce a similar reduction in the current meeting, particularly as global economic conditions have been rattled by the aggressive US tariffs under President Donald Trump.
Expectations From The MPC
HSBC Global Research said that it anticipated a 25 bps cut in the key rates from the MPC. The firm added that this will take the repo rate to 6 per cent, and there is expectation of two more cuts ahead in June and August.
Echoing the sentiment, Goldman Sachs also estimated the committee to slash key rates by 25 bps and pointed out that slower domestic activity, soft inflation trends, and easing global commodity prices — including a drop in Brent crude and the dollar index — offer the central bank room to maneuver.
Industry executives expressed their agreement with the analysts. Musharraf Hussain, COO, Ezeepay said that he expects the committee to go ahead with the rate cut and maintain a neutral policy stance. "It signifies the good entry of the RBI into stability over a much more-than-year-long period, and a further cut in rates now implies a forward-leaning approach to sustaining growth momentum. A neutral policy stance leaves the door open for responding to evolving conditions, and the current environment offers an opportunity to meet the demands of borrowers and stimulate consumption," he explained.
Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd, added, "We anticipate further rate cuts in the upcoming RBI monetary policy review in April, given the continued decline in inflation and improved liquidity conditions. The RBI’s rate cut cycle, which began with a 25-basis point reduction in February, is expected to see another cut of approximately 50 basis points in April, with the possibility of an additional cut in the June review meeting."
Rate Cut Signals Central Bank's Proactive Approach To Support Growth: Expert
Deepak Ramaraju, Senior Fund Manager, Shriram AMC, noted that the Reserve Bank of India’s (RBI) decision to shift to an accommodative stance and cut the repo rate by 25 basis points is a welcome move amid global economic uncertainties. “This signals the central bank's proactive approach to support growth and liquidity in the economy, especially in light of potential headwinds such as escalating trade tensions and counter tariffs.”
We Expect The Rate Cut Cycle Get Deeper Post The Stance change: Expert
Gaura Sen Gupta, Chief Economist at IDFC FIRST Bank, said, "We expect the rate cut cycle to be deeper post the stance change to accommodative. We now see another 50bps cut in the remainder of 2025 v/s earlier expectation of 25bps. Another factor is the comfort on inflation with RBI seeing durable alignment of headline inflation with the 4 per cent-target in FY26. Despite the downward revision in FY26 GDP estimate to 6.5 per cent from 6.7 per cent, we continue to see downside risk from tariff tensions. In our assessment downward impact of growth from tariffs is 0.5 per cent, which hasn’t been baked into the GDP estimate."
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