RBI may cut rates to boost growth

New Delhi

The Reserve Bank of India (RBI) began its latest monetary policy review on Monday, with experts expecting a 25 basis point (bps) rate cut. This comes amid falling inflation and global challenges caused by new US tariffs under President Trump.

The Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, will announce its decision on Wednesday. In February, the RBI cut the repo rate from 6.5% to 6.25%, marking its first reduction since May 2020.

Experts predict more cuts ahead. A report by State Bank of India suggests a total of 100 bps cut could come in phases, including one this week and another round starting August. The report said the global economy faces pressure due to trade barriers, currency fluctuations, and unstable capital flows.

Debopam Chaudhuri, Chief Economist at Piramal Group, called for a bigger 50 bps cut, citing a rare chance as US rates drop and the rupee strengthens. He said this opportunity might not last long.

Shikhar Aggarwal of BLS E-Services hopes for policies to support rural banking. He said lower interest rates could improve access to banking for underserved communities.

Ashish Gupta from Fretbox said startups are hoping for better liquidity and easier borrowing conditions. He said RBI policies can help small businesses grow.

Bajaj Broking noted that the US has imposed 26% tariffs on Indian imports, which could lower India's expected GDP growth by 20–40 basis points. This may push RBI toward more cuts to protect the economy.

The six-member MPC includes three government-appointed experts and two senior RBI officials alongside the Governor.