16 April 2025 (Punjab Khabarnama Bureau): As inflation hits a multi-year low and expectations remain subdued, a rate cut by the Reserve Bank of India (RBI) of 50 basis points is possible in June and August, said a report by SBI Research.
The report also suggests that total rate cuts could exceed 100 basis points amid growing concerns over an increasingly uncertain economic environment.
The report anticipates that GDP growth for the financial year 2026 (FY26) will stand at 6.3 per cent, with a downward bias.
“With multi-year low inflation this month and benign inflation expectations going forward, we expect rate cuts of 50 basis points in June and August. We believe the cumulative rate cuts could be now more than 100 basis points with an increasingly uncertain growth environment. We forecast GDP growth in FY26 at 6.3 per cent with a downward bias,” said the report.
The RBI’s Monetary Policy Committee (MPC) on April 9 announced a 25-basis-point (bps) cut in the repo rate, reducing it from 6.25 per cent to 6 per cent.
This marked the second consecutive rate cut in recent months. On February 7, the central bank reduced the repo rate from 6.5 per cent to 6.25 per cent.
Policy interest rate cuts provide support to economic growth and enhance both affordability and loan eligibility.
Summary: SBI Research predicts RBI will reduce the repo rate by 50 bps in June and August, aiming to boost growth amid low inflation.