All eyes on RBI: Will June monetary policy bring a third consecutive rate cut?

The Reserve Bank of India's Monetary Policy Committee (MPC) commenced its three-day deliberation on Wednesday, June 4, with heightened expectations of a 25-basis-point (bps) repo rate cut to support economic growth, which faces new headwinds from global trade uncertainties, particularly U.S. tariff actions under former President Donald Trump.

The committee, chaired by RBI Governor Sanjay Malhotra, will unveil its policy decision on Friday, June 6, 2025.

The central bank has already lowered the benchmark repo rate twice this year—by 25 bps each in February and April—bringing it down to 6 percent. If implemented, this would mark the third consecutive reduction in the short-term lending rate, reinforcing the RBI’s dovish stance amid subdued inflation and fragile global conditions.

Experts anticipate not only a rate cut in the upcoming policy but also hint at the possibility of another 25-bps reduction in the subsequent meeting, should domestic growth remain moderate and inflation stay within the RBI’s comfort zone.

Will RBI cut rates in the June Policy?

As India navigates a delicate balance between growth and inflation, analysts across brokerages and rating agencies are increasingly aligning around the possibility of a 25-basis-point repo rate cut by the Reserve Bank of India (RBI) in its June policy meeting. While inflation remains within the central bank’s comfort zone, slowing global growth and tepid domestic demand are expected to tilt the RBI’s stance towards monetary easing.

Analysts Expect Growth-Focused Cut with Stable Inflation

Suresh Darak, Founder of Bondbazaar, said the RBI may reduce the repo rate by 25 basis points to 5.75 percent in the June policy meet while maintaining its accommodative stance. “With inflation remaining below the 4 percent target, the central bank is likely to prioritise growth,” Darak said. He added that a downward revision in inflation forecasts could reinforce expectations of further rate cuts later this fiscal.

Darak also noted that such a move would benefit bond investors. “A rate cut typically boosts bond prices, especially government securities, leading to lower yields and higher returns for existing bondholders,” he said.

Echoing similar sentiments, Vaqarjaved Khan, Senior Fundamental Analyst (CFA) at Angel One, also projected a 25-bps rate cut. “A 50-bps rate cut is unlikely at this juncture,” Khan said, adding that RBI could opt for 1–2 more rate cuts in FY26 depending on GDP and inflation trajectories. He pointed out that the RBI’s views on global factors—particularly after the end of the U.S. tariff reprieve in July—would be crucial in assessing future moves.

Monetary Easing Cycle Likely to Continue, Say Experts

Bajaj Broking Research highlighted that the RBI had already initiated its monetary easing cycle in February and followed it up with a second rate cut in April, bringing the repo rate to 6 percent. “With inflation expectations anchored, moderating growth momentum, and external risks rising, the macro environment is becoming conducive for another cut,” the brokerage said.

It added that while the final decision would be sensitive to global developments—especially those from advanced economies—the likelihood of a third cut is increasing as the central bank seeks to sustain India's growth path amid global volatility.

CareEdge Ratings also supported the case for further easing. “CPI inflation is expected to remain comfortable in FY26, giving the RBI flexibility to focus on growth amid uneven consumption recovery and subdued manufacturing momentum,” it said. CareEdge projected a 50-bps total rate cut in FY26, with 25 bps expected in June. However, the agency added that deeper cuts could be on the table if growth shows further signs of faltering.

In conclusion, with inflation under control and several indicators pointing to a need for policy support, consensus is building around a 25-bps repo rate cut by the RBI in its June monetary policy meeting. While the magnitude and frequency of future rate cuts will depend on domestic growth and evolving global conditions, analysts agree that the central bank is preparing to shift its focus more squarely on growth in FY26.

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