RBI's April MPC Meeting: Repo Rate Cut to 6% Expected in 2025
The Reserve Bank of India (RBI) is anticipated to reduce the repo rate by 25 basis points to 6% during its April 2025 MPC meeting. This move is expected to bolster the economy, considering controlled inflation and weak domestic demand.
RBI MPC Meet: The six-member Monetary Policy Committee (MPC) of the RBI commenced its meeting on April 7, 2025. This is the first review meeting of fiscal year 2025-26 (FY26). The MPC's decision will be announced on April 9. Retail inflation fell to 3.6% in February 2025, below the target, providing the RBI with the necessary space to consider interest rate cuts.
25 Basis Point Repo Rate Cut Possible - Analyst Opinion
Nuvama, a global brokerage firm, believes the RBI may cut the repo rate by 25 basis points in this meeting and shift the monetary policy stance from "neutral" to "accommodative." The firm cites weak domestic demand, exacerbated by the global slowdown and trade wars, as requiring support.
Strong Rupee, Slow Domestic Spending Provide RBI Flexibility
According to Shishir Bajaj, Chairman of Knight Frank India, the February inflation rate reached a seven-month low. Furthermore, sluggish domestic consumption and a b rupee have provided the RBI with additional flexibility to cut the repo rate. He anticipates the rate could be reduced to 6%.
Positive Signals for Bond Market Investment
Puneet Pal, Head of Fixed Income at PGIM India Mutual Fund, notes that the RBI's policy is now growth-supportive, with a proactive approach to liquidity management. Investors should continue investing in short-term and corporate bond funds with a 12-18 month strategy. Dynamic bond funds and money market instruments are also attractive options. The 10-year bond yield is expected to remain between 6.25% and 6.50%.
