rbi-may-cut-repo-rate-by-25-bps-in-april-mpc-meeting

The Reserve Bank of India (RBI) is expected to shift its focus from controlling inflation to supporting economic growth in its upcoming Monetary Policy Committee (MPC) meeting in April.

 

According to Care Edge Ratings, the central bank is likely to cut the repo rate by 25 basis points, reflecting a shift towards a more accommodative monetary policy.

 

The April 7-9 meeting comes at a time when inflation has moderated significantly, primarily due to a decline in food prices. With retail inflation falling to 3.6 pc in February, its lowest level in seven months, the RBI now has greater flexibility to prioritise economic expansion.

 

Inflation in the food and beverages category also dropped to 3.8 pc in February, down from a peak of 9.7 pc in October 2025.

 

The RBI had already lowered the repo rate by 25 basis points in February, marking its first rate cut in five years. Care Edge suggests that inflation will likely remain close to the central bank’s 4 pc target over the next three quarters, providing further scope for policy adjustments aimed at boosting growth.

 

Despite a rebound in economic activity, India’s growth momentum remains below potential. The economy expanded by 6.2 pc in Q3 FY25, up from 5.6 pc in the previous quarter, but several challenges persist.

 

External risks, including global trade uncertainties, reciprocal tariffs, slowing global growth, and geopolitical tensions, continue to weigh on India’s economic outlook.

 

Care Edge also notes that the RBI is likely to maintain a neutral stance while keeping a close watch on international developments. If the US Federal Reserve cuts interest rates, it could ease pressure on the Indian rupee, potentially providing further room for the RBI to lower rates.

 

Another key factor influencing India’s economic trajectory is the US government’s new trade policy. President Donald Trump’s administration is set to introduce reciprocal tariffs on April 2, which could impact Indian exports.

 

The move aligns with Trump's "Fair and Reciprocal Plan," aimed at ensuring parity in trade tariffs imposed by other nations.

 

With global trade policy uncertainty remaining high, volatility in financial markets is expected to persist. The impact of these developments will be closely monitored by the RBI as it navigates its monetary policy decisions in the coming months.