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2w ago

RBI Poised to Cut Repo Rate to 5.75% in Third Consecutive Move

A six-year low in inflation has opened space for the RBI’s Monetary Policy Committee to extend its easing cycle to support growth through cheaper credit.

RBI.
A man checks his phone outside the Reserve Bank of India (RBI) headquarters in Mumbai, India, April 5, 2018. REUTERS/Francis Mascarenhas/ File Photo
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According to a report by SBI, the RBI is likely to announce a 50 basis points (bps) cut in the repo rate during this policy.

Overview

  • Economists polled by Bloomberg and Reuters overwhelmingly expect a 25 basis point cut at the June 6 MPC meeting, bringing the repo rate down to 5.75%.
  • Some strategists, including SBI advisers, have urged a jumbo 50 basis point reduction to accelerate credit growth and revive the lending cycle.
  • India’s retail inflation slowed to 3.16% in April, its lowest since July 2019, giving the central bank room to maintain an accommodative stance.
  • Governor Sanjay Malhotra’s panel has already cut rates twice this year and analysts anticipate another 25 basis point easing in August, though further large cuts are seen as unlikely.
  • A Nomura report projects cumulative repo rate reductions of 100 basis points by the end of 2025 as ample liquidity and subdued inflation continue to shape policy decisions.