The Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) will announce its decision on the policy rates today, Wednesday. RBI Governor Sanjay Malhotra will read the Monetary Policy Statement at 10:00 AM, which will be followed by a post-policy press conference at 12:00 PM. In this conference, the central bank’s governor will address media queries and explain the rationale behind the committee’s decision.
The central banks across the world are struggling to maintain economic stability amid rising uncertainties. One of the major concern among them is the recent tariff announcements by US President Donald Trump.
Moreover, these policies have put more pressure on the economies worldwide, making it tougher for central banks to find the right balance between boosting growth and keeping inflation under control.
In RBI’s last monetary policy announcement on February 7, the MPC unanimously decided to reduce the policy repo rate by 25 basis points from 6.5% to 6.25%. This was the first-rate cut in the current easing cycle.
RBI Monetary Policy Decision: What To Expect?
There is a wide split among economists on what the RBI may decide. While some experts are advocating for a 50 basis points (bps) cut in the policy rate to support economic growth, others believe a more cautious approach is likely. The other expects a smaller 25 bps cut, citing concerns over inflation, which continues to be a key challenge for the central bank.
Debopam Chaudhuri, Chief Economist at Piramal Group, suggested that the RBI should consider front-loading the rate cuts to support the Indian economy.
He said, “RBI should consider front-loading rate cuts, and a 50-basis-point cut in April can be a good pre-emptive move. Domestic inflation is low, globally, yields are coming down, and USDINR has regained some of its lost ground. These trends present a good opportunity for aggressive rate cuts.”
Sonal Badhan, Economics Specialist at Bank of Baroda, expects a smaller cut of 25 basis points but agrees that the RBI will move towards a more growth-friendly stance.
“We are going with a 25 basis points rate cut, as RBI will remain cautious until the situation of monsoon is more clear. However, the stance will be changed to accommodative, implying that after this, there is scope for more than one 25 basis points rate cut, depending upon the prevailing macroeconomic situation,” she said.
