RBI likely to slash down rates by 25 bps to 6% on April 9, says experts

As global markets experience a sharp downturn, many economists are urging the Reserve Bank of India (RBI) to take more decisive actions in its upcoming Monetary Policy Committee (MPC) meeting starting on Monday 7, 2025. This will be the first monetary policy meeting with the RBI Governor Sanjay Malhotra for the new financial year of 2025-26. MPC is likely to come with the decision of Repo Rate cut by 25 basis points, which will get the benchmarked rate of 6.25% straight down to 6%.

As India navigates these global uncertainties, the Reserve Bank of India faces the complex task of balancing domestic growth with global volatility. The upcoming monetary policy meeting is expected to determine the central bank’s response to rising concerns ahead. Given the global and domestic challenges, all eyes are now on the Reserve Bank’s next decision.

The upcoming MPC meeting is anticipated to set the direction, as these sessions play a major role in determining interest rate adjustments, influenced by factors like inflation trends, liquidity conditions and broader macroeconomic factors.

Global Factors Affecting Domestic Play:

A key concern is the tariff announcements by US President Trump’s administration, which have increased pressure on global economies. These tariffs are seen as both a challenge and an opportunity in India. As the U.S. economy faces mounting pressures, the long-term effects of these tariff decisions remain uncertain, further complicating the path toward economic stability.

As Federal Reserve has held rates & projected two rate cuts in the future this year to forecast their slower economic growth and higher inflation. Central banks worldwide are facing challenges in maintaining financial stability amid growing uncertainties.

Impact on retail lending and consumption:

The move to lower the repo rate is expected to boost consumption by encouraging increased borrowing, particularly in the retail lending market. A reduced repo rate typically lowers borrowing costs, which in turn drives demand for investment to stimulate all lending sectors. However, the actual impact of this rate cut will largely depend on how quickly commercial banks pass on the RBI’s policy changes to consumers.

By making borrowing more affordable, the RBI’s action creates a balance that supports both consumer benefits and economic growth. This rate cut will help consumers with investments in sectors like real estate, cars, gold, and other retail markets and it will also stimulate broader economic activity, aligning with the RBI’s ongoing initiatives for balancing consumer welfare and overall growth.

In Conclusion, these measures complicate the task for central banks, making it more challenging to balance economic growth while managing inflation. The outcome of this meeting could set the tone for India’s economic trajectory in the upcoming financial year, reflecting the RBI’s dual mandate to support GDP while maintaining price stability. RBI will announce the final decision after a three-day monetary policy meeting on April 9 .