The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is all set to announce its decision on the key interest rate on Friday (June 6) after its three-day deliberations. With inflation cooling, GDP growth showing resilience, and global uncertainties looming, expectations are high for another round of rate easing with the stance retained as ‘accommodative’.
India’s Q4FY25 GDP growth surged to a robust 7.4 per cent. For the full year, growth stood at 6.5 per cent, in line with estimates. Meanwhile, inflation in April 2025 moderated to 3.16 per cent, its lowest level since July 2019. This creates room for the RBI to shift focus more firmly toward growth support.
According to economists, the central bank will announce a 25 bps cut today, taking the key interest rate to 5.75 per cent. This will follow the two consecutive cuts of 25 bps announced each in February and April. Furthermore, it will be interesting to see whether the RBI now tweaks its inflation and growth forecasts for FY26.
Here’s what economists and brokerage firms are expecting from today’s speech by RBI Governor Sanjay Malhotra:
Deepak Agrawal, CIO-Debt, Kotak Mahindra AMC
The system liquidity needs to be in surplus to facilitate smooth transmission of rate cuts. As a result, the RBI has been infusing liquidity into the system since the beginning of the year and the banking system liquidity is in surplus at Rs 2.33 lakh crore as on May 31. The IMF predicted the Indian GDP growth for FY26 at 6.2 per cent. Given the analysis there is an outside chance for MPC to widen the Repo- SDF (standing deposit facility) spread from 25 -50 bps, resulting in a 50 bps transmission with 25 bp rate cut. However, going ahead, we expect an additional 25 bps rate cut by October.
JM Financial
The discussion within the MPC is likely to continue to revolve around tariffs and its implications, despite the recent calm due to the pause in reciprocal tariffs. Global central banks will choose to remain data dependent till the US finalises bilateral trade deals. We believe that the robust GDP growth in 4QFY25 and easing inflation trajectory in the domestic economy will restrict RBI’s ability to front-load (50bps) rate cuts. Although capex intensity and liquidity have improved, credit growth continues to moderate. Front-loading of rate cuts will suppress the interest rate differential further, risking negative impact on flows. Hence, the MPC is likely to maintain a cautious view and deliver a 25bps rate cut.
Mandar Pitale, Head – Financial Markets, SBM Bank (India) Ltd
The upcoming RBI MPC meeting is coming at the backdrop of strong GDP growth print of 7.4 per cent which was significantly higher than market expectation of 6.8 per cent. While it is difficult to make forward looking projections on global growth where significant uncertainties still exist, the latest domestic growth data suggest limited downside risks to growth. Therefore, we expect a 25 bp cut in policy rate at the June MPC meeting.
Rajani Sinha, Chief Economist, CareEdge Group
The upcoming monetary policy meeting in June takes place against the backdrop of a notable moderation in headline inflation in recent months, largely driven by easing food prices. In this environment of easing inflation and heightened global uncertainties, we expect the Monetary Policy Committee (MPC) to maintain its focus on supporting the ongoing recovery in the growth momentum. The rate- cutting cycle that began in February will likely continue, with a further 25-bps reduction in the repo rate expected at the June meeting, while retaining an accommodative stance.
Shishir Baijal, Chairman and Managing Director, Knight Frank India
Given the prevailing benign inflation environment and the moderate GDP growth of 6.5 per cent recorded in FY25, we expect the RBI to proceed with a 25-bps repo rate cut in the MPC review. The case for a rate cut is further supported by the revival in the liquidity conditions to a surplus of Rs 3.6 trillion, which enhances the effectiveness of monetary transmission. Additionally, the softening of G-sec yields reflects bond market confidence in the RBI’s inflation and liquidity management and strengthens the rationale for easing rates. With the anticipated rate cut, the cumulative reduction in the policy rate in this cycle would be 75 bps.
Bajaj Broking Research
The RBI began a monetary easing cycle in February and followed it up with another policy rate cut in April. Market participants are now watching closely for signs of a potential third rate cut, as expectations build for further monetary support to boost domestic growth amid worsening global macroeconomic conditions. The MPC has clearly shifted from a neutral to an accommodative stance, indicating the RBI’s intent to inject liquidity and support growth. With inflation expectations anchored, growth momentum moderating, and external vulnerabilities persisting, the environment is becoming more favorable for another rate cut.