(Reuters) – The Reserve Bank of India cut its key repo rate on Wednesday for a second consecutive time and changed its monetary policy stance to “accommodative” from “neutral” to boost the sluggish economy, which is facing further pressure from U.S. tariffs.
As expected, the Monetary Policy Committee (MPC) cut the repo rate by 25 basis points to 6.00%. It started reducing rates with a quarter-point reduction in February, its first cut since May 2020.
COMMENTARY
ANIRUDH GARG, PARTNER AND FUND MANAGER, INVASSET, MUMBAI
“The U.S. tariff escalations, weaker dollar and volatile crude prices pose potential risks to India’s exports and imported inflation. Yet, the RBI believes the domestic economy is well-positioned to weather these shocks.”
“The RBI has signaled its intent: revive growth while keeping inflation in check. For equity markets and investors, this marks the start of a more supportive monetary cycle, aligning well with India’s long-term structural growth trajectory.”
SAMANTAK DAS, CHIEF ECONOMIST, JLL INDIA, MUMBAI
“This move is a clear vote of confidence in India’s economic resilience, aiming to reignite consumption, investment, and improve consumer sentiment in a challenging global landscape.”
“For the property sector, this rate cut could be transformative.”
“With two consecutive reductions, we’re looking at a potential boost for home-buyer sentiment and affordability.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“We expect two more rate cuts from the RBI from here on, with the next one expected as soon as the June policy as monetary easing is front-loaded.”
“Recognising the increasing global headwinds due to tariff tensions, the RBI revised down its GDP growth forecast to 6.5%. As things stand today, we see growth undershooting this level in FY26 and expect growth at 6.3% for FY26.”
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“Given the burgeoning global uncertainty, the reduction in the MPC’s FY2026 forecasts for both the CPI inflation and GDP growth by 20 bps each and the change in stance…, we now expect an additional 50 bps of rate cuts over the next three policy reviews.”
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
“In the backdrop of weakening growth momentum and an uncertain global macroeconomic backdrop, we expect RBI’s MPC to remain growth supportive. We expect another 75 bps rate cut in FY26.”
SUJAN HAJRA, CHIEF ECONOMIST & EXECUTIVE DIRECTOR, ANAND RATHI GROUP, MUMBAI
“The RBI has retained its real GDP growth projection for FY2025-26 at 6.5%, which is 20 basis points lower than its previous estimate. We believe this reflects a conservative stance; in our view, real GDP growth is likely to trend closer to 7%, aided by improving domestic demand, easing financial conditions and strong corporate earnings momentum.”
“The policy demonstrates a cautious but supportive posture on both growth and inflation. The overall tone is market-friendly and should be viewed as positive for both equity and debt markets. Financials and infrastructure-related sectors stand to benefit the most.”
DEVENDRA KUMAR PANT, CHIEF ECONOMIST, INDIA RATINGS & RESEARCH, GURUGRAM
“The repo rate cut was on expected lines due to factors such as uncertain global environment due to reciprocal tariffs by the U.S., growth slowdown and the trajectory of retail inflation.”
“We expect 50 bps rate cut in the rest of FY26.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“Overall, policy guidance was dovish while monitoring global uncertainties and a consequent need to maintain stability in domestic financial markets. We expect 50 bps more cuts this year.”
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
“With inflation expected to be on the lower side, coupled with the fact that the trade war will prove to be deflationary outside the U.S., we feel that the stage is set for deeper rate cuts by the RBI going forward.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The (RBI) Monetary Policy Committee’s decision to ease repo rate by 25 bps and shift its stance to accommodative is in line with expectations.”
“We note the increasing global turmoil and its spillovers to the Indian growth slowdown will necessitate the MPC for deeper rate cuts. We see scope for additional 75-100 bps of rate cuts in the year ahead depending on the scale of global slowdown.”
(Reporting by Nishit Navin, Kashish Tandon, Anuran Sadhu, Aleef Jahan C S, Ashish Chandra, Hritam Mukherjee, Haripriya Suresh, Bharath Rajeswaran; Compiled by Dhanya Skariachan; Editing by Eileen Soreng)
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