25 bps Or 50 bps? RBI To Cut Repo Rate Again On June 6; MPC Meeting This Week, Know Expectations
Last Updated:
The RBI MPC will meet from June 4-6 to decide on interest rates. Economists expect a 25-bps cut in the repo rate to 5.75%, while SBI predicts a 50-bps cut.
The Reserve Bank of India's Monetary Policy Committee (RBI MPC) is set to meet for three days from June 4 to June 6, amid global uncertainties, to decide on interest rates in India. According to most economists, the central bank's rate-setting panel is expected to go for a 25-basis-point cut in the repo rate to 5.75%. However, SBI in its latest report expects a 50-bps reduction.
The Reserve Bank of India has reduced the repo rate by 50 basis points in the previous two monetary policy reviews to 6%. It cut 25 bps each in February and April reviews.
Expecting a 25-bps cut, Madan Sabnavis, chief economist at Bank of Baroda, said, 'We do believe that given the rather benign inflation conditions and the liquidity situation which has been made very comfortable through various measures of the RBI, the MPC would go in for a 25 bps cut in the repo rate on the (June) 6th."
The commentary on both growth and inflation will be important as there are expectations of revisions in their forecasts for both the parameters, he added.
Echoing similar expectations, Aditi Nayar, chief economist at ICRA, said, 'With the vegetable index dipping further, and compressing the food inflation the headline CPI inflation eased further to a 69-month-low of 3.16 per cent in April 2025… A 25-bps rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 bps each in the August and October 2025 policy reviews."
The CPI inflation is expected to average 3.5 per cent in FY2026, with the prints for Q2 and Q3 sharply trailing the MPC's projections for these quarters, allowing for an additional 75 bps of rate cuts in this calendar year, she said.
A basis point is equal to a 100th of a percentage point.
India's CPI inflation in April 2025, the latest available data, fell to 3.16 per cent, which is the lowest since July 2019. It is well within the RBI's target level of 4% (+/- 2%).
Sankar Chakraborti, MD & CEO of Acuité Ratings & Research, also expects a 25 bps interest rate cut saying that the latest nominal GDP growth data indicates that inflation is range-bound.
'The nominal GDP growth of 9.8% against a real growth of 6.5% implies a GDP deflator of around 3.3%, meaning our inflation is range-bound. This growth number, with the current background of low inflation, creates some monetary space. We continue to expect the RBI to deliver two more 25 bps rate cuts this year, in June and August," said Chakraborti.
India's real GDP grew by 7.4% in the fourth quarter of FY25, compared to 8.4% in the same quarter of the previous fiscal year. In full FY25, real GDP grew 6.5%, while nominal GDP rose 9.8%.
However, State Bank of India expects a 50 bps repo rate cut on Friday, June 6.
In its latest report, SBI said, 'We expect a 50-basis point rate cut in June'25 policy as a large rate cut could reinvigorate a credit cycle."
It also said a large rate cut could help revive the credit cycle, with the total rate cut over the easing cycle possibly going up to 100 bps.
The report highlighted that the current liquidity condition in the banking system is in extended surplus mode. Due to this, liabilities are getting repriced faster in the ongoing rate-easing cycle.
'Banks have already brought down interest rates on savings accounts to a floor rate of 2.70 per cent," according to the SBI report.
The report also pointed out other positive developments such as the Indian Meteorological Department's (IMD) forecast of an above-normal monsoon, strong arrival of crops, and falling crude oil prices. These factors have led SBI to revise its CPI inflation estimate for FY26 to around 3.5 per cent with a downward bias.
First Published:
June 02, 2025, 12:11 IST
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
16 minutes ago
- Indian Express
Niti Aayog asks if think-tanks should work on new data as MoSPI says alternative data can be used in official stats
Even as the Ministry of Statistics and Programme Implementation (MoSPI) presses ahead with the use of alternative sources of data in India's official statistics, the NITI Aayog has asked if the ministry should even be engaging with such data sets. Speaking on Thursday at the start of a two-day workshop on 'Using Alternate Data Sources and Frontier Technologies for Policy Making', NITI Aayog Vice-Chairman Suman Bery questioned if these new areas should be a priority for MoSPI and cautioned that they should 'not become an all-consuming task or preoccupation', although he added that using new data sources and technologies is 'very powerful' as it helps give a sense about the direction in which the economy is headed in a fast-moving world for real-time interventions. 'I would also make the point that to some extent the issue of whether all of this should be going on in MoSPI and in the statistical infrastructure or whether it should be going on in our rich network of think tanks is, I think, an appropriate issue. For example, NCAER… has a centre for data analytics,' Bery said. New Delhi-based think-tank National Council of Applied Economic Research (NCAER) set up a National Data Innovation Centre in 2017 to serve as a 'laboratory for experiments in data collection', among other objectives. Meanwhile, speaking at the same workshop, MoSPI Secretary Saurabh Garg said alternate data sources and frontier technology have 'reached a stage that we can actually use it for official statistics' and that this augured well for the future of data analysis. In an interview to The Indian Express, published on Thursday, Garg had said the Statistics Ministry is looking to use data from sources such as online booking platforms for air and rail fares and over-the-top (OTT) streaming services, among others, for the new Consumer Price Index (CPI) series that will be released in early 2026. 'For the new CPI series, MoSPI is expanding its approach by exploring alternative data sources, such as online platforms for airfare, rail fare, OTT platforms and administrative records for price data of petrol, diesel and LPG. Discussions are ongoing with IRCTC, under the Ministry of Railways, and the PPAC under the Ministry of Petroleum and Natural Gas for direct transfer of data for integration in CPI,' Garg said. MoSPI is in the process of revising its key macroeconomic indicators — CPI, the Index of Industrial Production (IIP), and Gross Domestic Product (GDP). Apart from updating the base years to 2022-23 for GDP and IIP, and 2024 for CPI, the revision exercise will also see changes in methodology used to compute the indicators. In addition, the updated CPI series will be based on a new basket of goods and services as per the findings of MoSPI's recent Household Consumption Expenditure Survey. This could result in near-obsolete items such as audio casettes being removed from the CPI basket, with prices of more contemporary goods like treadmills being used in the measurement of retail inflation. 'Intelligent integration' Chief Economic Adviser V Anantha Nageswaran, also speaking at the workshop, pushed for the use of alternative data in official statistics. While surveys, administrative, and national accounts data remain indispensable as inputs in making decisions, the pace, complexity, and granularity required by modern policymaking and the challenges attached to them 'have exposed limitations in both the periodicity and dimensionality of such data,' he said. According to Nageswaran, alternative data such as satellite-based night-time luminosity — used as a proxy for economic activity in areas with delayed or weak statistical reporting — and other satellite data can help policymakers monitor industrial activity, road connectivity, and cropping patterns, among others. 'These insights can inform timely decisions on input provisioning, crop insurance payouts, and regional procurement strategies,' he said. These new types of data capture emergent behaviour, respond faster to shocks, and reflect the 'lived experience of economic agents in ways that conventional aggregates sometimes cannot,' he added. However, the government's top economist warned that while alternative data can help policymakers move from 'retrospective diagnostics to proactive intervention', they could not replace official statistics and warranted 'intelligent integration'. 'Therefore, the mature approach is not to choose between official and alternative data but to design systems where each informs and validates the other, especially in environments where timely action is crucial,' Nageswaran said, adding that enthusiasm must be tempered with prudence as official data still carried a 'certain higher sense of authenticity and reliability and accuracy given the years of usage and in-built checks and balances'. With reference to frontier technologies such as artificial intelligence, Nageswaran said the 'black box nature of certain algorithms, the potential for bias embedded in training data, and risks to individual privacy must be actively mitigated through robust governance frameworks'. Further, these technologies should be deployed in a way that they are tailored to institutional absorption capacity. 'A well-designed algorithm is only as effective as the human systems interpreting and acting upon its output,' the chief economic adviser said. Aanchal Magazine is Senior Assistant Editor with The Indian Express and reports on the macro economy and fiscal policy, with a special focus on economic science, labour trends, taxation and revenue metrics. With over 13 years of newsroom experience, she has also reported in detail on macroeconomic data such as trends and policy actions related to inflation, GDP growth and fiscal arithmetic. Interested in the history of her homeland, Kashmir, she likes to read about its culture and tradition in her spare time, along with trying to map the journeys of displacement from there. ... Read More
New Indian Express
an hour ago
- New Indian Express
Realty shares zoom ahead of RBI monetary policy decision
Real estate stocks jumped as much as 10% on Thursday in anticipation of the RBI's Monetary Policy Committee (MPC) decision, scheduled for Friday. Market expectations are tilted toward a 25-basis-point repo rate cut, along with a continued accommodative stance—a positive signal for rate-sensitive sectors like real estate. The Nifty Realty index was the top-performing sectoral index on Thursday, climbing up to 2% in intraday trade before settling 1.75% higher. Since May 9, the realty index has surged more than 20%, outpacing the 3% gain made by the benchmark Nifty50 index. Meanwhile, India's equity market extended gains on Thursday as the BSE Sensex surged 443.79 points or 0.55% to close at 81,442.04, and the NSE Nifty50 advanced 130.70 points or 0.53% to settle at 24,750.90. Investors demonstrated robust demand for real estate stocks in anticipation of the RBI's upcoming policy decision on Friday. Market experts widely expect a 25-basis-point reduction in the repo rate -marking the third consecutive cut - as inflationary pressures ease. A small fraction also hopes the RBI goes for a 50 bps rate cut after retail inflation dropped to 3.16% in April, giving the central bank wider flexibility to prioritize economic expansion.
Time of India
2 hours ago
- Time of India
Nine new DMDs at SBI, 28 CGMs promoted in annual exercise
State Bank of India (SBI), the country's biggest government asset by market value, has promoted nine chief general managers (CGMs) as deputy managing directors (DMDs) in an annual exercise, people familiar with the information said. As many as 28 people have been elevated to the CGM level, similar to the 27 promoted last year, Four out of nine DMDs have already been posted to their respective positions, while five others are waiting for the final order of the department where they will take charge. SBI has 24 DMDs, each handling remits ranging from corporate banking, markets and treasury, recovery, retail, compliance, finance, operations, etc. The names of the new DMDs have already been updated at the bank's website. Rajeev Kumar, who was CGM at the bank's international banking group (IBG) in SBI's Mumbai headquarters, has already taken charge as DMD internal audit at the bank's Hyderabad office. SBI Card CEO, Salila Pande, has also been promoted as DMD and will continue with her current responsibilities she assumed in April. Ramesh Srinivas Rao has taken charge as DMD commercial clients group I (CCG I) from Gulshan Malik, who retired on May 31. Satyendra Kumar Singh has taken charge of CCG II, which was headed by Amitava Chatterjee, who took over as J&K Bank CEO at the end of December 2024. Both CCG I and II services large and medium sized companies (except conglomerates), out of the bank's head office in Mumbai. Rajesh Kumar, who was heading the bank's Hyderabad circle, will take over as DMD, agriculture and SME in the bank's corporate headquarters in Mumbai from Surender Rana, who retires in July. Other CGMs promoted to DMD position are Arvind Kumar Singh, Chander Shekhar Sharma, Parminder Singh and Anindya Sunder Paul. They await portfolios and will take over based on retirements or transfers. The DMDs typically report to managing directors (MDs). SBI has four MDs, each handling corporate banking and subsidiaries, retail and operations, risk, compliance and stressed assets recovery and international banking, markets and technology. The MD portfolios are distributed according to the discretion of the SBI chairman. SBI is India's largest lender with Rs 66.79 lakh crore in total assets, much higher than Rs 39.10 lakh crore of total assets of HDFC Bank , its nearest rival, as of March 2025. With more than 22,500 branches and 63,580 ATMs across India, it has the widest network in the country. Economic Times WhatsApp channel )
