RBI cuts rates for second consecutive meeting in April

Second cut in a row: At its meeting on 9 April, the monetary policy committee of the Reserve Bank of India (RBI) unanimously decided to reduce its policy rate by 25 basis points to 6.00%. The decision was in line with market expectations and followed February’s cut, which was the first in nearly five years.

Moderation in food prices supports easing: The key domestic factor influencing the RBI's decision on interest rates was inflation, which has declined notably recently; in particular, food inflation dropped to a 21-month low in February due to a strong seasonal correction in vegetable prices.

More cuts ahead: The monetary policy committee of the RBI voted to change its monetary policy stance from “neutral” to “accommodative”, indicating that the central bank will continue to reduce interest rates going forward. In line with this, our Consensus is for the RBI to cut rates by another 50 basis points by the end of FY 2025 as inflation settles near its 4.0% medium-term target and economic growth suffers from rising global protectionism. The next policy announcement is scheduled for 6 June.

Panelist insight: EIU analysts said: “Risks to growth have risen sharply despite the temporary pause on reciprocal tariffs imposed by the US. We now believe that India’s monetary easing cycle will involve a cumulative 100 basis points of rate cuts across 2025, instead of 75 basis points expected in February.”

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