RBI monetary policy meeting announcements: The Reserve Bank of India is widely expected to lower interest rates today, the first time in nearly five years. Governor Sanjay Malhotra is expected to lower interest rates in his first monetary policy review, bringing the repo rate to 6.25%.
Experts believe a 25 basis point reduction in the repo rate is likely, citing the government's growth-oriented policies and easing inflation concerns.
Madan Sabnavis, Chief Economist at Bank of Baroda, believes that macroeconomic conditions are ripe for rate cuts. Given the growth stimulus announced in Budget 2025, conditions appear to be favorable for a rate cut, he said. "The only concern now could be trade war outcomes as the rupee under pressure again," he said.
According to Edelweiss Mutual Fund, monetary policy will need to do a lot of heavy lifting to support economic growth, so a 25-bps rate cut is anticipated at the February MPC.
"There is room for the RBI to do more to boost the economy, as the finance ministry continues to keep the overall fiscal deficit under control," Shilan Shah, deputy chief emerging markets economist at Capital Economics, told. "This strengthens our conviction that the Bank will start loosening monetary policy after its MPC meeting on Friday under the new leadership."
"We are expecting a 25-basis points cut with less likelihood of RBI changing stance as it is incumbent for the central bank to remain watchful of inflationary pressures emanating out of external and internal factors," according to a note issued by STCI Primary Dealership.
However, some experts are skeptical of an imminent rate cut. Rumki Majumdar, an economist and director at Deloitte, believes the RBI will take a cautious stance. "Given the balancing act of controlling inflation and increasing credit growth, it will be a difficult decision. The RBI is under pressure to reduce policy rates. However, we believe the RBI will keep policy rates unchanged and maintain an easy stance," she said.
Umeshkumar Mehta, CIO of SAMCO Mutual Fund, stated that the MPC is likely to maintain current interest rates rather than cut them at this time to keep the currency stable.
