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News18
2 days ago
- Business
- News18
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
Indian Express
3 days ago
- Business
- Indian Express
RBI Policy: Why MPC is likely to cut repo rate for third consecutive time
The Reserve Bank of India's (RBI) six-member Monetary Policy Committee (MPC) is expected to cut the repo rate – the key policy rate – by 25 basis points (bps) in the policy meeting scheduled from June 4 to 6, to support growth as inflation continues to remain below the 4 per cent target. This would be the third consecutive reduction in the repo rate since February 2025. Economists also believe that the RBI may maintain the 'accommodative' monetary policy stance. With benign inflation, there has been a consensus among economists that the six-member MPC will cut the repo rate by 25 basis points (bps) to 5.75 per cent in the upcoming meeting. One basis point (bps) is one-hundredth of a percentage point. 'We expect RBI to cut policy rates by 25 bps in June. The space to cut policy rates is derived from sharp deceleration in inflation. Meanwhile, given the uncertainty on demand conditions both domestic and external, growth requires money policy support,' said IDFC First Bank Chief Economist, Gaura Sengupta. Headline inflation, as measured by year-on-year changes in the all-India consumer price index (CPI), moderated to 3.2 per cent in April, the lowest since July 2019, from 3.3 per cent in March. The easing in CPI has been driven by the sustained fall in food prices. Economists said that with inflation remaining below the 4 per cent target in the last three months (February, March and April), and a sharp fall in food inflation, CPI is likely to durably align with the 4 per cent target over a 12-month period. Under the flexible inflation targeting (FIT) framework, the RBI has been mandated by the government to maintain CPI at 4 per cent with a band of +/-2 per cent. 'The benign inflation outlook and moderate growth warrant monetary policy to be growth supportive, while remaining watchful about the rapidly evolving global macroeconomic conditions,' the RBI said in the annual report for 2024-25. The MPC is likely to retain the monetary policy stance as 'accommodative', analysts said. In the April policy, the rate-setting panel had changed the stance from neutral to accommodative. According to economists, the RBI is likely to revise its projections on real gross domestic product (GDP) and inflation for FY26. 'The commentary on both growth and inflation will be important as there are expectations of revisions in their forecasts for both the parameters. It is also expected that the RBI will detail its analysis on how the global environment would be affecting the Indian economy considering that the tariff reprieve provided by the USA would end in July,' said Madan Sabnavis, chief economist at Bank of Baroda. As per the RBI's estimate, CPI inflation for FY26 is expected to be at 4 per cent. The easing of supply chain pressures, softening of global commodity prices and higher agricultural production on the back of a likely above-normal south-west monsoon augur well for the inflation outlook in FY26, the RBI's annual report said. 'Any potential downward revision in FY26 CPI inflation will be closely watched, as it will provide an indication of the depth of the rate cutting cycle,' said IDFC First Bank's Sengupta. The real GDP growth for FY26 is projected at 6.5 per cent. In the quarter ended January-March 2025, the domestic economy picked up pace and grew at a four-quarter high of 7.4 per cent. For the financial year 2024-25, the growth rate stood at 6.5 per cent, which was a four-year low. 'The Indian economy is poised to sustain its position as the fastest growing major economy during 2025-26, supported by pickup in private consumption, healthy balance sheets of banks and corporates, easing financial conditions and the government's continued thrust on capital expenditure,' the RBI's annual report said. If the repo rate is reduced by 25 bps, all external benchmark lending rates (EBLR) linked to it will decline by a similar margin. It would be a relief for borrowers as their equated monthly instalments (EMIs) on home and personal loans will drop by 25 bps. Following a 50 bps cut in the repo rate since February 2025, most banks have reduced their repo-linked lending rates by the same magnitude. Lenders have also lowered their marginal cost of funds-based lending rate (MCLR). Following the likely repo rate cut in the June policy, the RBI is likely to go for a total reduction of 50 bps in the current financial year, experts said. 'Two more cuts over the subsequent two policy reviews are expected, taking the repo rate to 5.25 per cent by the end of the cycle,' said Aditi Nayar, chief economist, ICRA Ltd.
Time of India
3 days ago
- Business
- Time of India
RBI set to cut rates 3rd time in row
Mumbai: RBI is expected to cut the its benchmark rate by 25 basis points for the third successive time and continue with its supportive liquidity stance when the monetary policy committee concludes its three-day meeting on June 6. Economists say slowing growth and contained inflation leave room for further easing in monetary policy. India's GDP growth slowed to 6.5% in FY25 from 9.2% the previous year, though the March quarter saw a better-than-expected print of 7.4%. Inflation, meanwhile, remains within the RBI's 4% target. In April, RBI reduced its repo rate - the rate at which it lends to banks - by 25bps (100bps = 1 percentage point) to 6%. "We do believe that given the rather benign inflation conditions and the liquidity situation which has been made very comfortable through various measures of RBI, the MPC would go in for a 25bps cut in the repo rate on June 6," said Madan Sabnavis, chief economist, Bank of Baroda. He added that the central bank is also expected to revise its forecasts for growth and inflation and offer an assessment of global risks, particularly the impact of the upcoming expiry of the US tariff reprieve in July. A Prasanna of ICICI Securities also expects a 25bps cut, saying the robust Jan-March GDP growth confirms the case for moderate easing. "A preference for cuts in 25bps clips and accommodative stance means the MPC is well positioned to react to any data surprises on either side," he said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trading CFD dengan Teknologi dan Kecepatan Lebih Baik IC Markets Pelajari Undo He noted that RBI has already eased financial conditions by ensuring abundant liquidity. RBI has done this by pumping in rupee liquidity and by avoiding the usual borrowing that it does from money market to absorb surplus funds from banks. Barclays economist Aastha Gudwani noted that Q1 growth beat expectations, with GDP (gross domestic product) and GVA (gross value added) driven by a pickup in manufacturing and robust capital expenditure, even as consumption remained weak. "Full-year growth has come in at 6.5%," she said. Crisil expects RBI to cut rates by another 50bps this fiscal, citing favourable macroeconomic tailwinds such as expectations of an above-normal monsoon and subdued global crude prices. The IMD forecast of 106% of the long period average for the monsoon is likely to support kharif output, boost rural demand, and keep food inflation in check. Crude prices are forecast to average $65-70 per barrel this fiscal, lower than last year's $78.8. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
3 days ago
- Business
- Time of India
RBI likely to cut repo rate by 25 bps on June 6 amid low inflation, say experts
NEW DELHI: The Reserve Bank of India (RBI) is likely to announce a third consecutive 25 basis points (bps) rate cut on June 6, amid easing inflation and global economic uncertainty driven by US tariff actions. With consumer price inflation remaining below the 4 per cent median target, experts believe the move would support growth during a period of external volatility, according to a PTI report. The Monetary Policy Committee (MPC), the RBI's rate-setting panel, will begin deliberations on the next bi-monthly policy on June 4. The decision is scheduled to be announced on Friday, June 6. Following 25 bps repo rate cuts in both February and April, which brought the key policy rate down to 6 per cent, the six-member MPC, led by RBI Governor Sanjay Malhotra, also changed its policy stance from 'neutral' to 'accommodative' in April. The central bank has now reduced the policy repo rate by a cumulative 50 bps in 2025 so far, prompting multiple banks to lower their External Benchmark Lending Rates (EBLRs) and Marginal Cost of Funds-Based Lending Rates (MCLR). "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. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch vàng CFDs với sàn môi giới tin cậy IC Markets Tìm hiểu thêm Undo The commentary on both growth and inflation will be important as there are expectations of revisions in their forecasts for both the parameters," said Madan Sabnavis, chief economist, Bank of Baroda. He also expects the RBI to provide detailed insight into global factors affecting the Indian economy, especially in light of the expiration of US tariff relief in July. ICRA's chief economist, Aditi Nayar, also projects continued monetary easing through the year, as CPI inflation is forecast to remain below 4 per cent for most of the fiscal. "A 25 bps rate cut is expected next week, followed by two more cuts over the subsequent two policy reviews, taking the repo rate to 5.25 per cent by the end of the cycle," she said. The RBI's annual report, released on Thursday reiterated the central bank's plan to manage liquidity operations in line with the prevailing monetary policy stance, ensuring sufficient liquidity for the productive sectors of the economy. The government has mandated the RBI to maintain CPI-based retail inflation at 4 per cent, with a flexibility band of plus or minus 2 per cent. Assocham Secretary General Manish Singhal also supported the case for easing, citing multi-year low inflation and overall positive macroeconomic indicators. "Though the INR is likely to come under depreciation pressure in the short term, especially if global interest rates (e.g. in the US) remain elevated, its impact will depend on the changes in global risk appetite, crude oil prices and the Fed's own monetary stance. We emphasize the importance of strategic patience over aggressive easing, given the current environment of steady growth and manageable inflation," said Singhal. Echoing similar sentiments, Signature Global founder and chairman Pradeep Aggarwal expressed hope that the RBI would offer relief to homebuyers with a rate cut. "Given that several scheduled commercial banks have been reducing their lending rates following the previous two RBI MPC outcomes, another rate cut at this juncture would act as a catalyst for increased housing demand across segments. As a result, both first-time homebuyers and investors are likely to be encouraged to enter the real estate market, further strengthening demand across the sector," Aggarwal said. Also read: RBI slaps Rs 54.78 crore in penalties on banks and NBFCs for compliance lapses in FY25 An article in the RBI's May Bulletin highlighted that domestic bond yields have declined to multi-year lows, aided by back-to-back policy rate cuts and liquidity-enhancing measures. The report noted that monetary and credit conditions are evolving in line with the RBI's accommodative policy approach, aiming to bring inflation in line with targets while bolstering growth. India's GDP growth is estimated to have dipped to a four-year low of 6.5 per cent in FY 2024–25. Meanwhile, retail inflation in April 2025 eased to 3.16 per cent- the lowest year-on-year print since July 2019. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Business Standard
3 days ago
- Business
- Business Standard
RBI likely to deliver 3rd consecutive rate cut of 25 bps on Friday: Experts
The Reserve Bank is likely to go for a third consecutive rate cut of 25 basis points on Friday as inflation continues to remain below the median target of 4 per cent, to push growth amid continued global uncertainty triggered by the US tariff moves. Reserve Bank's rate-setting panel Monetary Policy Committee (MPC) will start deliberations on the next bi-monthly monetary policy on June 4 and announce the decision on June 6 (Friday). The RBI reduced the key interest rate (repo) by 25 bps each in February and April bringing it to 6 per cent. Six-member MPC headed by RBI Governor Sanjay Malhotra also decided to change the stance from neutral to accommodative in its April policy. In response to the 50-bps cut in the policy repo rate since February 2025, most of the banks have reduced their repo-linked external benchmark based lending rates (EBLRs) and marginal cost of funds-based lending rate (MCLR). "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," said Madan Sabnavis, Chief Economist, Bank of Baroda. He also expects that the RBI will detail its analysis on how the global environment would be affecting the Indian economy considering that the tariff reprieve provided by the US would end in July. Aditi Nayar, Chief Economist, ICRA said with CPI inflation forecast to trail 4 per cent for a large part of this fiscal, monetary easing by the MPC is likely to continue. "A 25 bps rate cut is expected next week, followed by two more cuts over the subsequent two policy reviews, taking the repo rate to 5.25 per cent by the end of the cycle," she said. In its annual report released on Thursday, the RBI said monetary policy is committed towards achieving durable price stability, which is a necessary prerequisite for high growth on a sustained basis. The Reserve Bank also said it will undertake liquidity management operations in sync with the monetary policy stance and keep system liquidity adequate to meet the needs of the productive sectors of the economy. The government has mandated the central bank to ensure Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. Secretary General of industry body Assocham, Manish Singhal too believes that with inflation hitting multi-year lows and expectations remaining benign, there is room for monetary easing and 25 basis points reduction in the repo rate in the upcoming policy. "Though the INR is likely to come under depreciation pressure in the short term, especially if global interest rates (e.g. in the US) remain elevate, its impact will depend on the changes in global risk appetite, crude oil prices and the Fed's own monetary stance. We emphasize the importance of strategic patience over aggressive easing, given the current environment of steady growth and manageable inflation," Singhal said. Pradeep Aggarwal, Founder and Chairman, Signature Global believes that the Reserve Bank of India is once again expected to offer major relief to homebuyers in its upcoming MPC meeting by reducing the repo rate by 25 basis points, driven by easing inflation and a stable economic outlook. "Given that several scheduled commercial banks have been reducing their lending rates following the previous two RBI MPC outcomes, another rate cut at this juncture would act as a catalyst for increased housing demand across segments. As a result, both first-time homebuyers and investors are likely to be encouraged to enter the real estate market, further strengthening demand across the sector," Aggarwal said. According to an article published in the RBI's May Bulletin, domestic bond yields steadily declined to multi-year lows, aided by back-to-back policy rate cuts in February and April 2025 and the liquidity measures that augmented durable liquidity. The overall monetary and credit conditions are evolving in sync with the Reserve Bank's extant monetary policy stance of ensuring that inflation progressively aligns with the target, while supporting growth. India's GDP growth has been estimated to have slowed to four-year low of 6.5 per cent during fiscal 2024-25. Retail inflation in April 2025 was at 3.16 per cent, the lowest year-on-year inflation after July 2019.
