RBI MPC Highlights: Indices Close Trading In Red As Rate Cut Fails To Drive Markets Higher
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Ashutosh Narang, Partner, IndusLaw, called the rate revision decision of the RBI MPC a step towards boosting economic activity. "Aligned with the Union Budget’s focus on reviving consumption-driven growth, it provides a much-needed boost by making borrowing more affordable for infrastructure and the private sector while also easing EMI burdens on home loans," the executive noted.
Sachin Chopda, MD, Pushpam Group, commented, "This is the first such reduction since May 2020, and it tells us clearly that the central bank intends to create an environment that will fuel growth and stability. This cut will help especially the real estate sector in segments mid and affordable housing since it lifts the worries of homebuyers. With this reduction, liquidity in the market increases, which positively pulls down the sentiment of the buyer and can pick up demand through all residential segments. Further, the forward-looking stance of the central bank on liquidity management and inflation targeting would give a conducive platform for continuous investments in the real estate sector, as investors and developers can design and look ahead with more solid confidence for planning."
Rajiv Sabharwal MD and CEO, Tata Capital, noted, "The RBI’s decision to reduce the repo rate to 6.25 per cent is a well-calibrated step that reflects confidence in India’s economic resilience while maintaining financial stability. This move will ease borrowing costs, supporting credit expansion, particularly in rural and semi-urban segments, where demand continues to strengthen. At the same time, the increase in the SDF (standing deposit facility) rate signals the central bank’s commitment to managing liquidity amid evolving global uncertainties. The policy direction coupled with fiscal measures in the FY26 Budget—will provide impetus to key sectors, including MSMEs and manufacturing.”
The Indian equity benchmark indices ended the trading session on Friday in red. Following the RBI MPC's announcement of a rate cut by 25 basis points, the indices continued to slip and closed the day lower. The BSE Sensex ended trading at 77,860.19, declining close to 200 points, while the NSE Nifty50 took a hit of close to 50 points and settled at 23,559.95.
Sarvjit Singh Samra, MD and CEO, Capital Small Finance Bank, applauded the RBI's rate cut decision, stating that it will help sustain economic growth and momentum. "By aligning monetary policy with the Union Budget’s investment and growth focus, the RBI has reaffirmed confidence in India’s financial system and long-term economic resilience. With borrowing costs set to ease, MSMEs, rural businesses, and semi-urban borrowers stand to benefit the most. The macroeconomic outlook, coupled with favourable growth-inflation dynamics and a well-balanced mix of fiscal and monetary policies are aligning for pro-growth stance, creating an ideal environment for accelerated credit growth and vibrant business momentum in the economy and banking space, especially for banks like ours, with a clear focus on serving the Middle Income Group (MIG) segment with emphasis on rural and semi-urban areas (SURU)," Samra noted.
Nikhil Aggarwal, Founder and Group CEO, Grip Invest, commented, "The RBI repo rate cut comes at a time when there are multiple macro pressures that may limit the effectiveness of this measure on growth. On the contrary, it may exacerbate certain pain points being felt in the economy. Inflation continues to be higher than target levels, liquidity in the banking system is severely constrained as reflected by the Rs 60,000 crore Open Market Operations (OMO) by RBI last week as well as the 10 year high FD rates being offered by banks and thirdly, there is significant pressure on the exchange rate which may increase further as rates in the economy move down vs US treasuries. While the rate cut, combined with the change in income tax slabs is expected to spur consumption, it will need to be seen if banks are able to truly pass on these lower rates to borrowers and how the economy deals with factors like inflation and a weak rupee that will further impact price of key goods like oil."
Ajay Kumar Srivastava, Managing Director & CEO, of Indian Overseas Bank, noted, “We welcome the RBI's decision to reduce the policy rate by 25 basis points, which is a positive step towards supporting economic growth and enhances credit availability. With the inflation rate expected to moderate further in FY26 and GDP growth estimated at 6.7 per cent, we believe this rate cut will provide a boost to the economy and stimulate investment and consumer demand, fostering overall economic momentum."
Anshuman Magazine, Chairman and CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “RBI’s decision to cut the repo rate by 25 bps will allow more liquidity to flow in and further stimulate growth while simultaneously bringing relief for borrowers. This much-awaited move by the RBI is poised to significantly boost the housing segment by stimulating demand, particularly among first-time homebuyers. It also offers an opportunity for developers to launch new projects, as this decision will also bring relief from cost pressures on construction costs. Overall, the rate cut will pave the way for expanded opportunities for buyers as well as developers.”
Atul Monga, Co-Founder and CEO, BASIC Home Loan, said, "The Monetary Policy Committee’s decision to reduce the policy rate by 25 basis points to 6.25 per cent is a strategic move to fuel economic growth by making borrowing more affordable. Both existing and new borrowers under floating rate loans stand to benefit from lower interest rates, improving loan affordability and accessibility. Fixed-rate loan borrowers will remain unaffected from the rate cut. That said, banks and housing finance companies may take some time to fully transmit the benefits of this rate cut to borrowers, depending on their policies and rate cycle.
Deepak Ramaraju, Senior Fund Manager, Shriram AMC, said, “Given the weakness in the Rupee against the USD Dollar and the uncertainty of tariff by the US government, RBI might delay future rate cuts. RBI will be watchful of the incoming inflation data and the currency movement before taking future rate cuts. As per our expectation, April could be the status quo of the interest rates.”
Manoj Gaur, CMD Gaurs Group and Chairman, CREDAI National, said, "The repo rate cut by RBI is a very welcome move. Coming at the heels of a people’s friendly budget, the repo rate cut of 25 bps announced by RBI will definitely infuse positive sentiments in the economy. Coupled with the income tax rebate, and tax concessions on second home and rental income, it will not only infuse liquidity in the market but also leverage the real estate sector’s investment potential. This supportive monetary policy was imperative, especially after the recent 50-basis-point reduction in the Cash Reserve Ratio (CRR), which has already injected significant liquidity into the banking system. Real estate nationally has seen some good investment in the past year and this trend is bound to continue in the coming quarter with this announcement."
Murthy Nagarajan, Head-Fixed Income, Tata Asset Management noted that the MPC considering the growth inflation dynamics, continued with its neutral stance and felt less restrictive monetary policy is more appropriate at the current juncture. “MPC seems to indicate, the repo rate cut in the April policy will depend on the macro-economic situation prevailing at that point in time and it is not a done deal. Market players expected RBI to improve liquidity in the banking system to allow faster transmission of repo rate cuts,” he added.
Sarvjeet Singh Virk, Co-founder and MD, Shoonya by Finvasia highlighted that the Reserve Bank of India's decision to cut the repo rate by 25 basis points to 6.25 per cent signals a shift towards supporting economic growth while maintaining inflation within target levels. “This reduction is likely to lower borrowing costs, encourage investments, and boost market sentiment,” he said.
“With GDP growth projected at 6.7 per cent for the next fiscal year and inflation gradually aligning with the target, the move provides a much-needed boost to businesses and consumers alike,” Singh said.
Lakshmanan V, Group President and Head - Treasury (treasurer), Federal Bank, said, "The MPC was on reasonably expected lines on all counts - Rate cut, stance and statement on liquidity measures. This decision in my view was a logical extension to the liquidity measures taken in Jan, along with clear assurances given by RBI to support liquidity whenever necessitated going forward. Today's outcome sets the stage for rate cut expectations in April unless the Inflation and global macro play havoc."
Dharmendra Raichura – VP & Head of Finance at Ashar Group, noted, “The Reserve Bank of India's decision to reduce the repo rate by 25 basis points to 6.25 per cent. This move is expected to have a positive impact on the real estate sector, particularly for first-time homebuyers. With lower home loan interest rates, our homebuyers will find housing more affordable, especially in the mid and premium segments. This reduced financial burden will boost property demand, encouraging more purchases and enhancing market liquidity. Developers will also stand to benefit from improved cash flow and reduced financing costs. This will enable us to stimulate construction activity, leading to more real estate projects and employment.”
Sunny Bijlani- Joint Managing Director of Supreme Universal, said, “The RBI’s decision to cut the repo rate by 25 bps from 6.50 per cent to 6.25 per cent in February 2025 is a significant boost for the real estate sector, particularly for homebuyers and developers. Lower borrowing costs translate into reduced home loan EMIs, making property purchases more accessible, especially in the premium and luxury segments. This move will not only ease the financial burden on existing homeowners but also encourage new buyers to enter the market, strengthening overall demand.”
Binod Kumar, MD & CEO of Indian Bank, noted, "The RBI's decision to deliver the anticipated 25 basis point rate cut is a welcome move, aligning with market expectations. Maintaining a neutral stance is also in line with the expectations. The MPC's focus on liquidity is a good and heartening thing, reflecting the government and RBI's concern in this area. Given the government's initiatives during the budget and the anticipated increase in household expenditure, we foresee optimistic GDP growth."
"Additional Factor of Authentication (AFA) such as OTPs for digital payments have played a significant role in preventing fraud. While all Indian cards have this additional layer of protection, this is currently mandatory only while transacting on Indian websites. Given the number and frequency of foreign-origin phishing attacks and other online scams, it is a very welcome move by the RBI to provide a similar level of safety for online international transactions using Indian cards on websites," said Adhil Shetty, CEO of BankBazaar.
Deepak Agrawal, CIO- Debt, Kotak Mahindra AMC, said, "After keeping it on hold for almost 2 years, RBI MPC decided to cut the policy rates by 25 bps in line with market expectations while keeping stance at neutral. RBI has guided to ensure sufficient durable liquidity in the system and will take pro-active measures for the same. Rate cut along with assurance on liquidity should help in boosting the consumption and revive growth. Inflation target has been pegged at 4.2 per cent and GDP Growth is pegged at 6.7 per cent for FY2025-26. As policy was on expected line and no immediate measure for on liquidity front,10 years G-sec has reacted by moving 4~5 bps higher post the policy announcement. We continue to expect incremental 25 bps rate cut till June 2025."
Manju Yagnik, Vice Chairperson of Nahar Group and Senior VP, NAREDCO, Maharashtra, said, "The RBI’s decision to cut the repo rate by 25 basis points to 6.25 per cent is a welcome step for the real estate sector, especially as this is the first reduction since February 2023. Lower home loan interest rates will provide much-needed relief to homebuyers, making property purchases more affordable by reducing EMIs. This move is expected to drive demand for housing, boosting market activity and encouraging more people to invest in real estate. It also enhances confidence among both buyers and developers, leading to a stronger and more dynamic sector. Developers will benefit from easier access to funds, helping them complete projects faster and meet the rising demand. At the same time, this decision aligns with the government’s focus on economic growth, supporting long-term stability in the housing sector. This rate cut is a much-needed push that will help both homebuyers and developers while driving positive momentum in real estate."
The Reserve Bank of India governor Sanjay Malhotra said that the interest of the economy requires maintaining financial stability, and to achieve this, we will persist in strengthening and rationalizing the prudential framework. While there are trade-offs between stability and efficiency, we are committed to continuing the consultative process in our regulation-making efforts. We want to reassure all stakeholders that this collaborative approach will remain a priority as we move forward.
RBI governor said that the rise in digital fraud is a growing concern, and to address this, the RBI has proposed extending two-factor authentication to offshore payments. Additionally, the RBI has urged banks and NBFCs to enhance their preventive and detective mechanisms to better manage cyber risks. To support long-term investors, the RBI also proposed including long-term contracts in government securities, allowing investors to effectively manage their interest rate risks.
RBI Governor Sanjay Malhotra stated that food inflation is expected to ease with the arrival of the new crop, as he announced the MPC decisions.
The RBI supports market efficiencies and does not target any specific exchange rate or band, as exchange rates are determined by market forces. The drainage of liquidity is primarily attributed to advance tax payments.
RBI governor said that the early corporate results for Q3 indicate a mild recovery in the manufacturing sector, with business expectations remaining optimistic. The services sector continues to perform well, while rural demand is trending upwards, though urban demand remains mixed. While core inflation is expected to rise, it is anticipated to remain moderate. The CPI inflation for FY25 is projected to be 4.8 per cent.
The GDP growth for the fiscal year 2025-26 is expected to be 6.7 per cent, with Q1 at 6.7 per cent, Q2 at 7 per cent, Q3 at 6.5 per cent and Q4 at 6.5 per cent, said RBI governor Sanjay Malhotra. "Inflation has declined supported by favourable outlook on food. It is expected to moderate further gradually aligning with the target," he said.
RBI Governor Sanjay Malhotra said that the central bank decided to reduce the repo rate by 20 bps to 6.25 per cent with a neutral stance during his monetary policy meeting announcements.
RBI Governor Sanjay Malhotra said that the CPI inflation has stayed in Line. RBI governor stressed that the resolutions of the Monetary Policy Committee affect the lives of all citizens in the country and are of significant relevance to businesses, economists, and all stakeholders.
Raoul Kapoor, Co-CEO of Andromeda Sales and Distribution, noted that a rate cut by the RBI has been widely expected. However, in the last monetary policy meeting, instead of lowering the repo rate, the central bank opted to reduce the cash reserve ratio (CRR). "Given the current domestic and global economic conditions, there is strong anticipation of a repo rate cut of 25-50 basis points in the MPC meeting. A rate cut of up to 50 basis points could provide significant relief to borrowers. Currently, home loan interest rates hover between 8.5 per cent and 9 per cent per annum," Kapoor said.
Pradeep Aggarwal, Founder and Chairman, Signature Global (India) Ltd, said, "A potential repo rate cut by the RBI in its upcoming MPC meeting could be a pivotal move in shaping India's economic momentum, particularly as the Union Budget 2025 is expected to drive consumption and investment. In the real estate sector, such a policy shift could lead to more affordable home loans, improving housing affordability and stimulating demand—especially in the mid and premium segments."
Indian benchmark indices opened on a positive note on Friday despite mixed global cues ahead of the RBI policy outcome. At the time of opening, the Sensex gained 11.40 points, or 0.01 per cent, to reach 78,069.56, while the Nifty rose 8.60 points, or 0.04 per cent, to 23,611.95. In early trading, 1,274 shares advanced, 911 shares declined, and 128 remained unchanged.
Industry chamber Assocham highlighted widespread expectations of a 25-basis point cut in the policy rate to 6.25 per cent. With food inflation moderating and promising prospects for the rabi crop, the chamber anticipates that food prices will further stabilise by March-April, providing room for a potential reversal in the rate cut cycle. Additionally, an SBI research report also predicts a 25-basis point reduction in the interest rate in the upcoming policy review.
"Growth and inflation data both point towards the need to ease monetary conditions. As such, we expect the RBI to cut the repo rate by 25 bps to 6.25 per cent in the February MPC, potentially in a unanimous decision, and take steps to inject durable liquidity, by considering another reduction in CRR of 50 bps, or substantial bond purchases through open market operations," BofA Global Research said.
Dhiraj Relli, MD & CEO of HDFC Securities, said that at the upcoming Monetary Policy Committee meeting, led by Governor Malhotra, the Reserve Bank of India is widely expected to cut the repo rate by 25 basis points. "However, this decision remains finely balanced. The central bank may instead prioritise liquidity measures and defer the rate cut to the April policy review, particularly in light of mounting global uncertainties," Relli added.
Aditi Nayar, Chief Economist and Head of Research and Outreach at ICRA noted that the growth-inflation dynamics have improved since the December 2025 policy meeting. "We don’t assess the fiscal stimulus provided by the Union Budget to have a significant bearing on inflation. Accordingly, we think the balance is tilted in favour of a rate cut in the February 2025 policy review," she said.
Madan Sabnavis, Chief Economist at Bank of Baroda, Noted, "There is a higher probability of a rate cut this time for two reasons. First, the RBI has already announced liquidity enhancement measures, which have improved conditions in the market. This appeared to be a prerequisite for cutting rates."