How much easing could RBI signal in April MPC?

The Reserve Bank of India (RBI) has embarked on policy easing from October 2024 through a combination of stance change, rate cut, liquidity easing, and exchange rate flexibility.

- SAMIRAN CHAKRABORTY

The April monetary policy committee (MPC) is likely to accelerate this process as the risks around growth and inflation have materially shifted in a rapidly evolving global environment.

To start with, growth and inflation forecasts will be in focus as the RBI will also publish their Monetary Policy Report (MPR) along with the MPC statement. Our estimate is that the direct gross domestic product (GDP) growth impact of the announced tariffs (if sustained) could be 40 basis points (bps) for FY26. It is likely that the RBI will lower its FY26 GDP growth forecast (6.7 per cent) by 20-40 bps on the back of these significant global developments. There is also a scope for the RBI to reduce its FY26 headline CPI forecast (4.2 per cent) by about 20 bps.