RBI likely to cut rates amid easing inflation, slowing growth, more easing expected on growth concerns: Mint poll

The economists unanimously predicted that the Reserve Bank of India’s monetary policy committee (MPC) would announce a 25 basis points (bps) cut in the repo rate to 6% after it meets on 7-9 April, as inflation and growth estimates undershoot earlier forecasts. Further, economists from Barclays Bank did not rule out even a 35-bps cut.

It would be the second successive cut in repo rate after 7 February, when the MPC, headed by new RBI governor Sanjay Malhotra, finally cut the rate (25 bps) for the first time since May 2020. A basis point is one-hundredth of a percentage point, and the repo rate refers to the rate at which RBI lends money to commercial banks.

However, only three out of the 10 economists polled expect a change in policy stance to ‘accommodative’ from ‘neutral’ at present. An accommodative stance indicates RBI is ready to support growth by cutting rates.

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“The path for further policy easing appears quite clear and straightforward, with growth likely to be seen in a range which is deemed non-inflationary, headline inflation likely to be sub 4% for next few months, and the pressure on exchange rate coming down substantially," said Rahul Bajoria, head of Indian and ASEAN economic research at Bank of America Global Research, in his report.

Since the previous policy announcement in February, retail inflation has slipped to a seven-month low of 3.61%, down from 4.3% in January, mainly driven by lower food prices. Food inflation eased to 3.75% in February, a significant drop from 5.97% in January 2025. Meanwhile, the rupee appreciated 1.74% against the US dollar since 7 February.

Slowing growth, more cuts

At the same time, economists, who earlier expected RBI to cut rates once or twice more this year, now see more cuts happening, and are pencilling in a 75-100 bps rate cut through the calendar year as they expect a possible economic slowdown in India due to the reciprocal tariffs announced by the US last week. To be sure, the RBI’s MPC meets once every two months or six times a year to decide on resetting policy rates.

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Goldman Sachs has lowered its estimate for India’s GDP (gross domestic product) growth for FY26 to 6.1% from 6.3%. Nomura has now forecast GDP growth at 6% in FY26 compared to its earlier expectation of 6.2%, while Mumbai-based QuantEco Research estimates a 30-bps hit.

Most of the economists polled by Mint do not expect RBI to revise its GDP growth forecast of 6.7% and inflation forecast of 4.2% for FY26.

“It is too early to consider actual forecast changes, but to state the obvious: risks to FY26E growth of 6.5% are materially downwards," said Madhavi Arora, chief economist, Emkay Research.

“This will emanate from a much higher risk of a US/global recession if these global tariffs are maintained. The disinflationary impulse for Indian industry could emanate from lower global commodity prices/supply glut of goods," said Arora.

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Late last week, the Donald Trump-led administration announced a volley of reciprocal tariffs for countries exporting to the US, including India, triggering concerns of a global trade war and an economic slowdown.

Liquidity surplus

Since the previous policy announcement in February, the RBI is estimated to have infused liquidity worth ₹7.5 trillion, leading to system-wide liquidity finally turning to a surplus at the end of March.

The central bank has announced open market operation (OMO) purchases of over ₹2 trillion, two long-dated variable repo rate (VRR) operations, and two additional USD-INR (dollar-rupee) buy-sell swap operations amounting to ₹1.7 trillion.

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“We believe durable liquidity infusion measures are here to stay and see more OMO purchases, long-dated VRR operations, additional FX swaps, and likely TLTROs (targeted long-term repo operations) as the situation demands," said economists of Barclays in its report. “We no longer see the need for a CRR cut in FY25-26 to manage the liquidity situation."

CRR, or cash reserve ratio, refers to the amount of deposits that banks need to keep with RBI. The last CRR cut of 50 bps happened in the December policy announcement of the MPC.