RBI MPC meets: Will interest rates be cut this week?
What's the story
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has begun its meeting to discuss the next interest rate decision. The panel, led by RBI Governor Sanjay Malhotra, is expected to announce its verdict on Friday. The decision comes in light of a growth-oriented Union Budget and the recent India-US as well as India-EU trade deals that have positively impacted market sentiments.
Rate forecast
Experts predict repo rate to remain unchanged at 5.25%
Experts believe that the RBI will keep the repo rate unchanged at 5.25%. This comes after a 125 basis points cut in the key short-term lending rate since February 2025. The view is that there are no immediate concerns on growth or inflation fronts, which could prompt a pause in rate cuts. However, some experts suggest one more cut could be possible to lower borrowing costs further.
Economic impact
RBI's rate-cutting cycle may be over: BofA Global Research
A note from BofA Global Research suggests that the RBI's rate-cutting cycle may be over for now. The recent trade deal is expected to boost growth certainty, with high-frequency indicators likely to sustain their current momentum. The report also says that while the RBI may be done cutting rates, it will continue managing liquidity provisions carefully to ensure active rate transmission.
Policy outlook
Enough room for RBI to stay on pause
Deepak Agrawal, CIO - Debt at Kotak Mahindra AMC, believes the RBI's upcoming policy is set against a supportive domestic macro backdrop. He said with inflation well below target and growth momentum intact, conditions favor policy stability. Despite global uncertainties, India's strong growth dynamics and record foreign exchange reserves give the MPC enough room to stay on pause.
Future focus
MPC likely to focus on liquidity conditions, says expert
Lokanath Panda, COO at BLS E-Services, expects the RBI's MPC to pause its rate cuts. He said after reducing the repo rate by 125 basis points since early 2025, the central bank is now likely to focus on liquidity conditions, bond market stability and currency risk management. The government has tasked RBI with keeping CPI-based retail inflation at 4% with a margin of 2% on either side.