RBI: The Reserve Bank of India (RBI) is once again preparing to give a big relief to the middle class. According to the report, RBI may cut the repo rate in the monetary policy committee meeting to be held next month. In fact, research agency India Ratings and Research said on Thursday that the Monetary Policy Committee of the Reserve Bank of India may cut the key policy rate repo by 0.25 percent in its review meeting next month with the aim of accelerating economic growth.

What is the detail

Devendra Kumar Pant, Chief Economist and Head of Public Finance, India Ratings, said, “We expect gross (headline) inflation to decline to 4.7 per cent in FY 2024-25. There could be an overall reduction in monetary policy by up to 0.75 per cent in the financial year 2025-26. However, if the impact of the US retaliatory tariffs turns out to be more than expected, then the RBI may give more relaxation on the monetary policy front, he said. The Monetary Policy Committee of RBI will have six meetings in the next financial year 2025-26. The first meeting is to be held from 7 to 9 April.

What did the rating agency say?

The rating agency said, “India Ratings expects that the Monetary Policy Committee (MPC) may opt for a 0.25 per cent cut in the policy rate in the monetary policy review meeting to be held in April 2025.’’ RBI had not changed the key policy rate repo for a long time due to high inflation. The central bank had increased the policy rate by 2.50 percent to 6.5 percent between May, 2022 and February, 2023.

Repo rate was reduced in February

In February 2025, the repo rate was cut by 0.25 per cent to 6.25 per cent. India Ratings expects retail inflation to fall below four per cent in the March quarter of FY2024-25 after a gap of 21 quarters. It expects the RBI to cut policy rates thrice in FY2025-26 by a total of 0.75 per cent. India Ratings said, “With the reduction in the policy rate in February 2025, the overall repo rate is expected to be reduced by one per cent. This will lead to a repo rate of 5.5 per cent and average inflation around four per cent.

That is, the actual repo rate in the financial year 2025-26 will be 1.5 percent. The rating agency said that the details of the MPC meeting held in February 2025 show that the RBI is aware of the slowing pace of growth. This shows that low and stable inflation remains the main objective of the RBI, but the focus of monetary policy will be on supporting growth through monetary policy.