RBI POISED TO EASE RATES FURTHER AS INDIA EYES STEADY ECONOMIC RECOVERY

On 6 June, RBI may reduce repo rate by 25 bps, marking 3rd consecutive cut since Feb

- KAUSHIK DAS

As India enters a new fiscal year marked by evolving global complexities and domestic resilience, the focus of monetary policy is likely to continue towards supporting growth, without compromising price stability. The Reserve Bank of India (RBI) is expected to deliver another 25 basis points (bps) repo rate cut in its 6 June policy meeting, bringing the policy rate down to 5.75%. This would mark the third consecutive cut since February 2025, signaling a proactive approach to easing financial conditions with the objective of stimulating credit and investment, while ensuring a durable alignment of the 4% CPI target. The policy stance turned accommodative in April and is likely to continue.

The central bank will likely maintain its FY26 growth forecast of 6.5%, while maybe lowering CPI inflation forecast to 3.8%, from 4%. In April, RBI revised both the growth and inflation forecasts lower. The policy coordination between the government and RBI remains the strongest now, with the fiscal and monetary authorities showing strong resolve to do "whatever it takes" to prevent India's growth from slipping much below its potential.