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Informist, Wednesday, Apr. 9, 2025

MUMBAI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's first bi-monthly monetary policy statement for 2025-26 (Apr-Mar) detailed on Wednesday:

BANKERS

C.S. SETTY, CHAIRMAN, SBI

The RBI rate cut coupled with the revision in stance to accommodative was a swift, timely move and a forward guidance to the market to stay supportive against evolving global uncertainties. The revision of stance to accommodative will cushion the secondary impact of tariffs on domestic economy. With inflation under check, growth imperatives will take precedence in FY26.

On the regulation side market-based securitisation framework for stressed assets, review of policy on gold lending and non-fund-based facility is timely. Widening of co-lending framework gives wider choices to all parties concerned. 

(Christina Titus)

ECONOMISTS

GAURA SEN GUPTA, CHIEF ECONOMIST, IDFC FIRST BANK

We expect the rate cut cycle to be deeper post the stance change to accommodative. We now see another 50-basis-point cut in the remainder of 2025 compared to earlier expectation of 25 bps. Another factor is the comfort on inflation with RBI seeing durable alignment of headline inflation with the 4% target in FY26. Despite the downward revision in FY26 GDP estimate to 6.5% from 6.7%, we continue to see downside risk from tariff tensions. In our assessment, downward impact of growth from tariffs is 0.5%, which has not been baked into the GDP estimate.

While the governor maintained the delinking of the stance from liquidity conditions, we continue to expect another INR 4 trillion of durable liquidity infusion in FY26. This is required to ensure that system liquidity is in a INR 2-trillion surplus or 1% of net demand and time liabilities. The latter is essential for transmission of rate cuts to take place.  

(Christina Titus) 

MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES LTD

RBI's unanimous 25-basis-point rate cut and stance change to 'accommodative' reflect the uncertain global environment and benign inflation environment; the change in stance provides a directional easing bias going forward.

Given global volatility and uncertainty, the MPC chose not to frontload all its actions and thus kept its powder dry for rainier days. The fluid global dynamics will require RBI to be nimble in managing any risk of tighter financial conditions, especially as the shock to sentiment and capital flows will likely require higher risk premia from emerging markets.

The RBI may want to keep ammunitions ready, given fluid global markets, apart from conventional easing. Options such as non-conventional easing in the form of easier regulatory (lending) norms, lower daily cash reserve ratio maintainance requirement for banks to sub 90%, sterilised rupee management, etc. may be used, if needed. One does not know the extent to which this global trade war could stretch. Monetary policy may have to do the heavy lifting in India by being more counter-cyclical than fiscal this year. 

While (in) June, (a) 25 bps cut is a given, we no longer rule out another 25-50 bps cut from there, which could take the terminal rate to 5.25% in this cycle, of course contingent on the extent of the global slowdown and recession.

While the 20 bps (GDP) growth downgrade by the RBI to 6.5% for FY26 reflects the uncertain global environment, we think there would be material downward risk to their growth forecast – to the tune of 50-70 bps. This would emanate from a much higher risk of a US or global recession if these global tariffs are maintained, while domestic private economic agents stay largely absent.
 
We reckon with the RBI that FY26 inflation would have a net disinflationary impulse which could emanate from lower global commodity prices or supply glut of goods. 

China's survival response to (the) massive tariff blow will matter for India, amid its excess industrial capacity and dumping in the world or Asia and use of foreign exchange as a policy tool. 

(Ashna Mariam George)

DHARMAKIRTI JOSHI, CHIEF ECONOMIST, CRISIL

The monetary policy met expectations with a 25-basis-point rate cut. With downside risks to growth greater compared with the February policy and inflationary pressure weaker due to falling crude prices, a rate cut was a forgone conclusion. The shift in stance supports the durability of the rate reduction cycle, and we anticipate at least two more rate cuts of 25 bps each within this fiscal year.

The global environment, meanwhile, has become more uncertain due to significant tariff increases by the US and retaliatory measures from some economies. Consequently, the downside risks to growth in major economies are now considered a base case scenario.

The Reserve Bank of India has cut its growth forecast to 6.5% due to rising uncertainty and downside risks from tariff-related developments. Given the numerous moving parts, forecasts are now less reliable. Nonetheless, in our base case, we project India to grow at 6.5% with risks tilted to the downside and inflation rate of 4.3% in FY26. The downside risks to growth come from rising uncertainty, which impairs decision making, and the impact of tariffs and slowing global growth on exports.  

(Gowri Lakshmi)

SHILAN SHAH, DEPUTY CHIEF EMERGING MARKETS ECONOMIST, CAPITAL ECONOMICS

The RBI's decision to cut the repo rate by another 25 basis points today (Wednesday) to 6.00% comes as no surprise given the recent sharp drop in inflation and the headwinds from US tariffs. But the dovish tone of the communications reinforces our view that the central bank will loosen policy by a bit more than the consensus expects.

The MPC unanimously voted for a cut today (Wednesday). Unsurprisingly given the circumstances, Governor Sanjay Malhotra's statement included plenty of discussion around the headwinds from US reciprocal tariffs. The governor noted that "uncertainties remain high in the wake of the recent spurt in global volatility" and that "headwinds from global trade disruptions continue to pose downward risks".

Of course, it is only the sharp fall in inflation that has given the RBI scope to loosen policy. The headline CPI rate has fallen sharply in recent months. That has been largely due to the slowdown in food inflation. Granted, food inflation is extremely volatile. But the signs are that it will fall further given supportive weather conditions. Governor Malhotra noted that "the outlook for food inflation has turned decisively positive".

Looking ahead, with uncertainty around US trade policy set to rumble on and inflation looking contained, further rate cuts are likely. Indeed, the change in the official policy stance from "neutral" to "accommodative" supports our view that rates will fall further than most expect: we think the repo rate will drop to 5.50% this year. 

(Cassandra Carvalho)

INDRANIL PAN, CHIEF ECONOMIST, YES BANK

The RBI has delivered what the market expected – a 25-basis-point repo rate cut and a change in stance to 'accommodative'. It was also explained that being 'accommodative' means that there would be no chance of a rate hike at this point, even as the RBI stays vigilant with the evolving macro scenario of tariff wars and geopolitical risks.

Both inflation and growth forecasts were lowered by 20 bps. There were no fresh liquidity measures that were announced in this policy. The space for policy rate cuts was predicated by a decisive change in the inflation outlook, led by food prices and more specifically, vegetable prices. Given the projections by Skymet of a normal monsoon, the risks to food inflation are likely reduced.

At the other end of the spectrum, global growth risks have unleashed a sharp softening in crude oil and other commodity prices, and this is also a positive for India's inflation dynamics. Overall, the confidence that inflation would remain aligned to the 4% target has magnified. Given a 4% inflation target, the scope of pushing repo rate down to 5.50% in this cycle has opened. Consequently, we expect the RBI to cut (rates) in June and also in August. 

(Ashna Mariam George) 

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK

A dovish tilt from the RBI policy today (Wednesday). The combination of a 25-basis-point rate cut along with a change in stance to accommodative is a decisive signal that more rate cuts can be expected in the coming months. We expect two more rate cuts from the RBI from here on, with the next one expected as soon as June, as monetary policy easing in frontloaded.

Recognising the increasing global headwinds due to tariff tensions, the RBI revised down its GDP growth forecast to 6.5% (for FY26). As things stand today, we see growth undershooting this level in FY26 and expect growth at 6.3% for FY26.

(Cassandra Carvalho)

RADHIKA RAO, ED AND SENIOR ECONOMIST, DBS BANK

Undertaking a second successive step to ease policy, the RBI's Monetary Policy Committee voted unanimously in favour of a 25-basis-point rate cut. In line with our view, the stance was revised to 'accommodative', reflecting policymakers' comfort with the evolving inflation trajectory and providing room to support growth. This was reinforced by the modest downward revision in growth projections.

Recent liquidity management measures have underscored the preference to maintain a surplus balance, thereby keeping the banking system well-oiled and aiding policy transmission. Overall, the policy guidance remained dovish, while keeping an eye on global uncertainties and the consequent need to maintain stability in domestic financial markets. We expect a further 50 bps of cuts this year.

(Vidhushi RajPurohit)

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK

The Monetary Policy Committee's decision to ease repo rate by 25 basis points and shift its stance to accommodative is in line with expectations. We note the increasing global turmoil and its spillovers to the Indian growth slowdown will necessitate the MPC for deeper rate cuts. We see scope for additional 75-100 bps of rate cuts in the year ahead depending on the scale of global slowdown.

(Cassandra Carvalho)

JAHNAVI PRABHAKAR, ECONOMIST, BANK OF BARODA

Amid the tariff turmoil and escalated concerns of global trade war, the world economy is facing unprecedented volatility. Careful monitoring of the situation is needed as India will not be insulated from the adverse impact.

The Monetary Policy Committee has been proactive in addressing growth challenges and this has been reflected by frontloading of two (rate) cuts back to back. The rate-setting panel's dovish tone has kept room open for further cuts in order to curtail global economic uncertainty at play. We expect up to 75-100 basis points cumulative reduction in rates, including two cuts already made in this calendar year. 

(Srijita Bose)

RAJANI SINHA, CHIEF ECONOMIST, CAREEDGE RATINGS

The cut in policy rate by 25 basis points is on expected lines. The change in stance to accommodative indicates that going forward the focus of the Monetary Policy Committee will be on supporting growth amidst muted inflationary pressure. While the RBI has trimmed the growth projection for FY26 to 6.5%, we feel the growth could be lower at around 6.2%. We estimate the direct impact of reciprocal tariffs at around 0.2-0.3% of GDP, and to add to that, there will be indirect impact in midst of heightened global uncertainties.

Inflation is likely to remain muted, though our projection for average CPI for FY26 is 4.2% (marginally higher than RBI's projection), as we remain concerned about weather related uncertainties like heatwaves etc. In midst of global uncertainties and growth concerns, we expect further 50 bps rate cut in FY26. We do not rule out the possibility of the rate-cut cycle being even deeper if the global trade war severely dents growth prospects.  

(Cassandra Carvalho)

FUND MANAGERS

NILESH SHAH, MD, KOTAK MAHINDRA ASSET MANAGEMENT CO. LTD.

The RBI has equipped the Indian economy with helmet (liquidity), bat, other accessories (interest rate cut), and pep talk (change of stance to accommodative), so that it can play on a green top wicket in a cold and cloudy (geoeconomic and geopolitical environment) morning against the seam, fast, and unpredictable bowling of US President Donald Trump. 

This is the best a coach can do. Now, the players have to play it out so that we can score runs when the weather clears and pitch eases.  

(Gowri Lakshmi)

LAKSHMI IYER, CEO, INVESTMENT AND STRATEGY, KOTAK ALTERNATE ASSET MANAGERS LTD

Tariff shock equal to rate cut therapy. This seems to be the formula that more central bankers are likely to adopt - including RBI, which offered the recipe that markets were expecting - 25 basis points cut in repo rate. The icing on the cake was the stance change to accommodative from neutral.

Inflation worries also seem to have abated given the sharp fall in crude oil prices. The downward revision in 2025-26 (Apr-Mar) GDP forecast reflects the uncertain global environment, hence the agility in action.

Fixed income to be favoured as a risk off in such environment and we urge investor to stay invested and continue to allocate to fixed income.  

(Ashna Mariam George)

DEEPAK RAMARAJU, SENIOR FUND MANAGER, SHRIRAM ASSET MANAGEMENT CO

The Reserve Bank of India's decision to shift to an accommodative stance and cut the repo rate by 25 basis points is a welcome move amid global economic uncertainties. This signals the central bank's proactive approach to support growth and liquidity in the economy, especially in light of potential headwinds such as escalating trade tensions and counter tariffs.

The reduction in borrowing costs along with tax cuts announced in the Budget is expected to boost consumption demand, especially in interest-rate sensitive segments. This can also support discretionary spending, which could aid sectors like auto, consumer durables, and housing. The move can also help India's relative economic outperformance versus global peers, given the backdrop of a slowing global economy.

However, market sentiment was dented by the RBI's mention of revised gold loan guidelines, which has triggered uncertainty. NBFCs and banks with a strong gold loan portfolio witnessed sharp corrections. The risk-off mood among investors, driven by regulatory overhang, contributed to the sell-off. The fact that the guidelines are open for comments and review adds a layer of unpredictability to the earnings visibility for these companies. 

While the policy stance is supportive of growth and liquidity, sector-specific regulatory risks, especially in the gold loan segment, are creating near-term volatility. Investors and stakeholders will be closely watching for clarity on gold loan norms, which could help in reassessing valuations and risk appetite for financials exposed to this segment. 

(Gowri Lakshmi)

UMESHKUMAR MEHTA, CHIEF INVESTMENT OFFICER, SAMCO MUTUAL FUND

RBI's monetary policy outcome was in line with consensus estimates and a 25-basis-point rate cut should augur well both for the financial system and the economy. Given the ongoing tariff war across the world, an accommodative stance along with a stable inflationary scenario would ensure buoyant credit growth and support our domestic environment. The rate cut is indeed positive for our bond markets but the ongoing pressure on US bond yields restricts the full extent of the impact in India. 

(Christina Titus) 

OTHERS

APURVA SHETH, HEAD OF MARKET PERSPECTIVES AND RESEARCH, SAMCO SECURITIES

The RBI announced its second interest rate cut in a row from 6.25% to 6.00%...however, what truly stood out wasn't the decision, but the candid admission by the governor on the global trade uncertainties. He highlighted how unresolved geopolitical tensions and tariff wars are clouding the global growth outlook. The most striking remark came when he acknowledged the limits of even the central bank's own capacity to quantify the full impact of these uncertainties.

When the governor sitting in the highest chair says he can't quantify the adverse impact, it tells you the level of unpredictability we are dealing with. This is the sentiment echoed across market circles.  

(Akash Mandal)

GIRISH KOUSGI, MD & CEO, PNB HOUSING FINANCE

The RBI's decision to reduce the repo rate by 25 basis points and shift its stance to 'accommodative' is a welcome move, especially in the current environment of moderating inflation, and global headwinds. For the housing finance sector, this signals a favourable lending environment and bodes well for homebuyers, particularly in the affordable and mid-income segments.

Lower interest rates will help improve housing affordability and are likely to spur demand for home loans, thereby giving a boost to residential real estate. Additionally, the RBI's focus on ensuring adequate liquidity and enhancing credit availability provides confidence to both lenders and borrowers.

(Vidhushi RajPurohit)

ARVIND KAPIL, MD & CEO, POONAWALLA FINCORP LTD

We welcome the RBI's mature and forward-looking move to adopt an accommodative policy stance, underpinned by a balanced view on inflation and growth. The repo rate cut, coupled with the commitment to maintain adequate liquidity, reflects a timely and prudent response to evolving macroeconomic challenges. This stance is a positive step toward reinvigorating demand and catalysing investments across sectors.

For the non-banking financial companies sector, in particular, it signals a conducive environment to deepen credit access and drive inclusive growth. We believe the proposed policy revisions will stimulate the banking and financial services ecosystem in the right direction and support the broader goal of sustaining a healthy and resilient economy. 

(Cassandra Carvalho)

End

Compiled by Vinodini Yadav

Filed by Avishek Dutta

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