Top News

As the Reserve Bank of India’s Monetary Policy Committee (MPC) convened on Wednesday, anticipation is mounting across markets and industries over a potential third straight repo rate cut. Economists and analysts widely expect the central bank to reduce the repo rate by another 25 basis points, bringing it down to 5.75 per cent.

Chaired by RBI Governor Sanjay Malhotra, the committee's outcome will be officially announced on June 6. Having already slashed the policy rate by a cumulative 50 bps in the previous two reviews, the RBI had settled at 6 per cent. This week’s meeting could extend that trend.

The push for another rate cut comes in the backdrop of a weakening global outlook and a marked softening of domestic economic momentum. Market watchers note that a more accommodative policy would help counterbalance the impact of external shocks and maintain domestic growth stability.

Falling Inflation And Slowing GDP Key Drivers

The central bank’s increasingly dovish approach is being underpinned by two major developments: falling inflation and decelerating growth. Headline CPI inflation dropped to 3.2 per cent in April, its lowest level since July 2019, staying well within the RBI's target band of 2–6 per cent.

“The MPC has clearly shifted from a neutral to an accommodative stance, indicating the RBI’s intent to inject liquidity and support growth. This pivot is reinforced by April’s CPI inflation easing to 3.2 per cent, the lowest since July 2019 and staying well within the RBI’s comfort zone,” noted Bajaj Broking Research.

Meanwhile, GDP projections are being scaled back. While the RBI held its FY26 growth estimate at 6.5 per cent in April, several global institutions have revised their forecasts to between 6.0 and 6.3 per cent.

Market Builds Case For Deeper Cuts

Investor sentiment now leans strongly toward another easing move. In fact, a recent SBI report goes a step further by forecasting a deeper 50-bps cut in the upcoming policy.

“Domestic liquidity and financial stability concerns have receded. Inflation is expected to stay within the tolerance band. Keeping the domestic growth momentum intact should be the main policy focus and provide the justification for a jumbo rate cut,” stated Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

Transmission Already Underway

Banking sector signals indicate that the current rate-easing cycle is already being felt by savers. Banks have lowered savings account interest rates to as low as 2.70 per cent — the floor rate — and fixed deposit rates have been cut by 30 to 70 basis points since February 2025.

According to the SBI report, with surplus liquidity continuing in the system, transmission to deposit rates is expected to strengthen further in the months ahead. As global economic cues evolve, all eyes now turn to the RBI’s June 6 policy announcement, which could mark another key step in India’s ongoing monetary recalibration.