Goldman Sachs has forecasted a 25 basis points (bps) reduction in the Reserve Bank of India’s (RBI) repo rate during the upcoming Monetary Policy Committee (MPC) meeting on April 9, 2025. The financial services firm anticipates the repo rate to drop to 6% and further decline to 5.50% by the end of the year, citing favorable economic conditions for easing policy rates.
The report highlights several factors contributing to this outlook, including a moderation in domestic economic activity during the first quarter, benign inflation levels, and a sharp decline in Brent crude oil prices. March’s Consumer Price Index (CPI) inflation is estimated at 3.7%, well below the RBI’s target, creating a conducive environment for rate cuts. Additionally, the banking system’s liquidity surplus, driven by RBI’s proactive measures, has further supported the case for easing monetary policy.
Goldman Sachs has also revised India’s real GDP growth forecast for 2025, lowering it by 30 bps to 6.1% year-on-year due to global challenges such as US tariff hikes and a slowdown in services exports. Despite these headwinds, the firm expects headline CPI inflation to remain close to 4% in the second half of the year, driven by lower food inflation.
The MPC’s decision will be closely watched as it navigates the complexities of stimulating growth while maintaining inflation targets. Experts believe that the anticipated rate cut could provide much-needed relief to borrowers and boost economic activity in the face of global uncertainties.
As the RBI prepares to announce its first bi-monthly monetary policy of the fiscal year, the financial sector and market participants are eagerly awaiting the outcome of the MPC meeting and its implications for India’s economic trajectory.
