RBI MPC Meet: Another rate cut likely? Central Bank to hold FY26 first policy meeting starting — April 7

RBI MPC Meet: India's central bank, the Reserve Bank of India (RBI), will hold its bi-monthly meeting starting Monday, April 7, to decide on the key benchmark interest rates or repo rates.

The upcoming meeting will be the first monetary policy meeting for the financial year 2025-26, which will determine the outcome of the key lending rates for the central bank, scheduled to be announced on Wednesday, April 9, 2025.

RBI conducts the Monetary Policy Committee (MPC) meeting every two months in a year, marking six meetings for a financial year where it decides on the interest rates based on multiple factors like money supply, inflation outlook, and other macroeconomic indicators.

According to ICICI Bank's definition, a Repo Rate is the interest rate at which the central bank (RBI) lends money to the nation's commercial banks when there is a shortage of funds in their system. It is the key borrowing rate that commercial banks use to borrow money to cater for their short-term needs against government securities.

Experts Take

As RBI prepares for its MPC meeting, experts anticipate that the central bank will likely cut its repo rates for the second consecutive time since Governor Sanjay Malhotra took charge before the February 2025 MPC Meeting.

In the February 2025 MPC meeting, the committee headed by Governor Malhotra cut the key benchmark interest rates by 25 basis points to 6.25 per cent from their earlier 6.5 per cent levels.

This rate cut was the first reduction after nearly two and a half years since May 2020, which was delayed due to inflation's grasp on the nation.

Bank of Baroda's Chief Economist, Madan Sabnavis, said that the inflation and liquidity have settled down, which is likely to be a step for a 25-basis-points rate cut this time in the upcoming MPC announcement.

“While it does look like conditions are rather clear for another 25 bps cut in repo rate this time with the inflation prospects being benign and liquidity having settled down, it is also expected that the stance will change to accommodative, meaning...that there could be more rate cuts in the offing during the course of the year,” Sabnavis told the news agency PTI.

The rating agency, ICRA, also estimated that the committee would reduce the rates by 25 basis points in the upcoming announcement, maintaining a “neutral stance” for the Indian economy.

“While the Central Bank's liquidity interventions are likely to continue with the target of offsetting the upcoming drain arising from the unwinding of the short positions in its forward book and the maturity of long tenor VRRs (Variable Rate Repo), we do not expect any major announcements around liquidity injections, such as a CRR cut in the MPC meeting,” ICRA added, as per the agency report.