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Experts say the RBI is expected to continue with its interest rate easing cycle with another 25 bps rate cut in April, after the latest CPI data that shows India’s retail inflation rate falling to a seven-month low of 3.61 per cent.
The next RBI MPC meeting will take place between April 7 and April 9, 2025, and the interest rate decision will be announced on April 9, the last day of the meeting.
The latest retail inflation data has cemented the expectations of another interest rate cut by the RBI MPC in its monetary policy review next month. According to the latest official data, India’s CPI inflation has slowed to a seven-month low of 3.61 per cent in February on the back of lower inflation in food and protein-rich items. Experts said the Reserve Bank of India is expected to continue with its easing cycle with another 25 bps rate cut in April.
The next RBI MPC meeting will take place between April 7 and April 9, 2025, and the interest rate decision will be announced on April 9, the last day of the meeting.
Aditi Nayar, chief economist of ICRA, said, “The February 2025 CPI inflation print falling well below 4% has cemented the expectation of a back-to-back 25 bps rate cut in the April 2025 MPC meeting. This may be followed by another 25 bps repo rate cut either in the June 2025 or the August 2025 meetings, dependant in large part on the next GDP growth print for Q4 FY2025.”
A basis point (bp) is a 100th of a percentage point.
The RBI has been tasked to keep retail inflation at 4 per cent with a margin of 2 per cent on either side. The central bank cut the key repo rate by 25 basis points last month on easing concerns on the inflation front.
Sujan Hajra, chief economist and executive director, Anand Rathi Group, said, “Easing food prices, coupled with lower global crude oil prices, have provided a supportive backdrop for inflation to align more closely with the RBI’s 4 per cent target. Against this backdrop, the RBI, which recently cut the repo rate by 25 bps and implemented liquidity measures to address the system’s deficit, is likely to maintain its easing cycle.”
Home, Auto, Personal Loan EMIs To Come Down
After the RBI decides to cut its key policy rate by 25 basis points (bps) on April 9, the equated-monthly instalments (EMIs) of home loan, personal loan and auto loans will come down.
The amount of reduction will depend upon the individual banks as to how much they pass on the rate cut on MCLR-based floating loans.
ICRA’s Nayar said, “We are apprehensive that tight liquidity conditions may delay transmission of policy rate cuts to bank deposit and lending rates.”