RBI repo rate cut: Experts see up to 75 bps deduction in 2025. Will this be enough to counter Trump’s tariffs?

The Reserve Bank of India (RBI) on April 9 delivered a widely-anticipated 25 basis points cut in the repo rate—the second consecutive easing move by the central bank in 2025—bringing the key lending rate down to 6 per cent.

The six-member Monetary Policy Committee (MPC) voted unanimously in favour of the reduction, while also shifting its stance from ‘neutral’ to ‘accommodative’, signalling an easing bias in the upcoming policy cycles.

This move follows February’s similar rate cut, marking a definitive turn in the RBI’s policy direction amid softening inflation and increasing global economic headwinds. The central bank also lowered its inflation forecast for FY26 to 4 per cent (from 4.2 per cent earlier) and trimmed the GDP growth projection to 6.5 per cent, citing growing risks from geopolitical tensions, trade frictions, and potential tariff escalations by global powers, including the US.

Analysts See Room for More Cuts

Following the Reserve Bank of India’s recent 25 basis point repo rate cut and a shift in stance, economists believe the central bank is likely to continue easing rates through the year. Amid soft inflation and growing global economic uncertainties, the consensus is building that monetary policy may have to play a more active counter-cyclical role as India navigates a challenging external environment.

Madhavi Arora, Chief Economist at Emkay Global Financial Services, said the RBI’s latest policy action indicates a clear easing bias, especially in light of heightened global volatility. 

“The MPC deliberately chose not to frontload its moves, preserving headroom to respond to potentially worsening global financial conditions. A June rate cut of another 25 bps appears likely, with a further 25–50 bps reduction on the table depending on the extent of the global slowdown,” she said. Arora also suggested that the RBI could resort to non-conventional easing tools, including relaxed lending norms and lower daily CRR requirements, to support liquidity if the global trade war escalates further.

According to Rajani Sinha, Chief Economist at CareEdge Ratings, the 25 bps cut was well anticipated, but the revised growth outlook and accommodative stance signal the RBI’s intent to support a slowing economy. “We estimate a direct impact of 0.2–0.3 percent of GDP from retaliatory tariffs, with additional indirect pressure from global uncertainties,” she noted. While the RBI expects FY26 GDP growth at 6.5 per cent, CareEdge sees it closer to 6.2 per cent. Sinha projected a further 50 bps reduction in the repo rate in FY26, warning that a deeper cut might be necessary if trade tensions escalate dramatically.

Long-Term Outlook Remains Positive

Divam Sharma, CEO & Co-Founder of Green Portfolio, acknowledged that the RBI’s policy was broadly in line with expectations and aligned with a wait-and-watch approach. 

“With falling interest rates, cheaper imports, and new trade agreements in sight, the medium to long-term outlook for India remains strong,” he said. While short-term volatility may persist, subdued inflation offers the central bank room for one or two more cuts this year. Sharma pointed to strong domestic consumption and rising export opportunities as key tailwinds.

Room for 75–100 bps Cut in FY26

Echoing a similar sentiment, Manoranjan Sharma, Chief Economist at Infomerics Valuation and Ratings, said the back-to-back 25 bps cuts in February and April were driven by the need to spur economic growth amid subdued inflation. “This will provide much-needed relief to borrowers across interest rate-sensitive sectors,” he said, adding that the accommodative shift strongly suggests further easing. “We expect the total rate cut in FY26 to range between 75–100 bps, depending on how inflation and growth trends evolve.”

Overall, with inflation under control and external risks rising—from geopolitical tensions to potential trade disruptions—experts believe the RBI will likely continue on its easing path through 2025. The scale and pace of cuts, however, will be shaped by how global economic uncertainties unfold. As India positions itself for long-term growth amid short-term volatility, monetary policy appears poised to take centre stage in driving economic resilience.

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