The Reserve Bank of India (RBI) is anticipated to implement a 25 basis points reduction in rates in April, according to various foreign banks and brokerages. The move follows the recent monetary easing and is expected to be accompanied by additional liquidity measures to bolster economic growth while monitoring inflation and global interest rate trends.
Expert Insights and Economic Forecasts
Pranjal Bhandari, Chief Economist for India and Indonesia at HSBC Global Research, forecasts a 25 basis points cut in April, along with more liquidity measures later in February. Bhandari emphasizes the importance of ensuring that reserve money aligns with nominal GDP to support a gradual rate-cutting cycle. Anubhuti Sahay, Head of India Economic Research at Standard Chartered Bank, shares a similar view, predicting a repo rate cut in April contingent on global interest rate movements.
Santanu Sengupta, Chief Economist at Goldman Sachs India, notes that subdued food inflation could maintain headline inflation at around 4.5% in the first half of 2025, allowing room for further rate reductions by the RBI. Upasana Chachra, Chief India Economist at Morgan Stanley Research, underscores the central bank’s pro-growth stance through rate cuts and liquidity management, hinting at a final rate reduction in April. Radhika Rao, Executive Director and Senior Economist at DBS Bank, echoes the sentiment with a forecast of a 25 bps rate cut in April, with an expectation for the repo rate to ease to 5.75% by the end of 2025.
The recent rate cut has sparked discussions on the future trajectory of the RBI’s monetary policy. While most experts anticipate a 25 bps cut in April, the potential for a more extended easing cycle hinges on economic conditions, global interest rates, and inflation trends.
Market Expectations and Economic Impact
With the RBI poised to introduce another rate reduction, market analysts are closely monitoring the central bank’s actions and their implications on the broader economy. Speculation abounds regarding the potential impact of the rate cut on sectors like real estate, manufacturing, and consumer spending.
The anticipation of additional liquidity measures alongside the rate cut underscores the RBI’s commitment to fostering growth while maintaining price stability. As global economic uncertainties persist, India’s central bank faces the delicate balancing act of supporting domestic economic activity without stoking inflationary pressures.
As the April policy review draws near, all eyes are on the RBI and its policy decisions. The outcome of the impending rate cut and liquidity measures will not only shape India’s economic landscape in the short term but also have far-reaching implications for the country’s growth trajectory in the months ahead.
