RBI Rate Cut: A Quick Shot For India's Growth Amid Global Slowdown?

The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 6% from 6.25%. The policy stance was also changed from ‘neutral’ to ‘accommodative’ to assist economic growth in the face of global uncertainty.

The move comes as India’s Consumer Price Index (CPI) inflation dropped to 3.61% in February 2025 well within the RBI’s comfort zone of 4%,  giving the central bank room to ease monetary policy. 

The inflation forecast for FY26 has been revised downward to 4%, while the GDP growth estimate has been adjusted to 6.5% from 6.7% earlier.

Positive for Bond Markets and Credit Growth

Umeshkumar Mehta, CIO of SAMCO Mutual Fund, said that RBI’s Monetary Policy outcome was in line with consensus estimates and a 25 bps rate cut should augur well both for the financial system and the economy. He added that RBI’s stance and stable inflation would ensure buoyant credit growth and support our domestic environment.

“The rate cut is indeed positive for our bond markets, but the ongoing pressure on the US bond yield restricts the full extent of the impact in India,” Mehta said further.

Ajit Mishra, SVP of Research at Religare Broking, also observed that alongside the rate cut, the policy stance was shifted from neutral to accommodative, signalling the central bank’s readiness to ease further if required. 

He sees this shift narrows future options to either maintaining the current rate or implementing additional cuts, depending on evolving economic conditions.

“By enhancing liquidity and reducing interest rates, the central bank seeks to support domestic momentum, counterbalance external shocks such as global trade disruptions and U.S. tariff actions, and create a more conducive environment for sustainable economic growth.” He concluded.

 Also Read: RBI Repo Rate Cut By 25bps: How Will RBI Rate Cut Impact Your EMIs?

More Rate Cuts Likely

SBI Mutual Fund’s CIO,  Fixed Income, Rajeev Radhakrishnan sees the key message as the unambiguous focus on domestic growth and the confidence that forward-looking inflation is likely to be aligned closer to the policy target of 4%.

“Alongside the demonstrated commitment to addressing liquidity dynamics, the policy stance clearly opens up the likelihood of additional rate cuts in this cycle”, he said.