RBI MPC Meeting 2025 HIGHLIGHTS: RBI cuts repo rate by 25bps, shifts to accommodative stance

Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance, said, “Monetary Policy Commission (MPC) has exemplified its pro-growth stance in today’s policy by delivering a 25-bps rate cut to 6 per cent and change in stance to ‘Accommodative’, amidst heightened global volatility caused by tariff wars. MPC has alluded to being agile in the current fluid global landscape and ensuring stability in domestic financial markets. The modest nudging of Inflation and growth forecasts lower indeed reflects MPC’s comfort on the inflation trajectory & the requisite need to support growth. While the extent of trade war impact is yet ambiguous, monetary policy is rightly taking on the baton of pump priming the economy & doing the heavy lifting in India. Overall, a dovish policy, amid the looming uncertainty around global growth. The change in policy rate will also help insurance companies to be more competitive in their offerings and capitalize on the opportunities in an ever-expanding financial space.”

Sudipta Roy, Managing Director & CEO, L&T Finance Ltd, said, “RBI’s reiteration of its pro-growth stance amidst current global backdrop is reassuring. Extending co-lending rules to all regulated entities and all loans, could prove to be a game changer for the domestic financial sector over time. It presents a huge opportunity for NBFCs to build on their niche strengths and partnerships, towards wider credit dissemination.”

Madan Sabnavis, Chief Economist, Bank of Baroda, said, “RBI has shown inherent confidence in the economy in the midst of the tariff turmoil. While GDP growth has been lowered for the year to 6.5% inflation has also been moderated to 4%. Given the change in stance to accommodative which has been clarified as referring not to liquidity but future rate action we may expect another 25-50 bps cut through the year. A pause in June is possible as the monsoon is gauged. We can expect repo at say 5.5% by March.”

DK Srivastava, Chief Policy Advisor, EY India, said, “RBI’s second successive reduction of policy rate of 25 basis points and change of stance to accommodative, signals its willingness to safeguard India’s GDP growth prospects, ensuring that it does not fall below 6.5 per cent inspite of the ongoing global tariff turmoil. The RBI recognises that global uncertainties will have an adverse impact on India’s growth prospects. However, a periodic injection of monetary stimulus supported by maintenance of adequate liquidity conditions and healthy domestic economic conditions including robust agricultural prospects will help India maintain a reasonably high GDP growth in the presence of a likely global growth slowdown. The expectation is that RBI will continue the downward rate cycle by reducing the repo rate all the way to 5.25% by successive reductions of 25 basis points each in the next three rounds.”

An analysis report by SBICAPS said, “The complexity of the world in which we live exceeds our capacity to fully comprehend it—especially in the financial realm. We often speak of risk with a sense of familiarity, yet seldom do we confront the deeper, more elusive force: uncertainty. In a bold and unconventional move, the RBI is rewriting the playbook—cutting rates even as the INR depreciates, while simultaneously stacking up a massive FX forward sales position amidst low interest rate differentials. This dual-action strategy marks a shift from tradition, signalling not just agility, but a willingness to walk the tightrope between growth support and currency stability. It’s a fascinating dance of liquidity and leverage in a market where timing is everything.”

Sankar Chakraborti, MD & CEO, Acuité Ratings & Research, said, “With CPI inflation easing to 3.6% in February and FY26 projections at 4% on the back of a favourable monsoon, the move is timely. While domestic fundamentals such as buoyant rural demand, improving urban consumption, rising capacity utilization, and healthier corporate balance sheets remain supportive, the global economic landscape is fraught with downside risks. RBI has lowered its FY26 growth forecast from 6.7% to 6.5% due to growing concerns over global headwinds.Heightened trade tensions, an escalating tariff war, and persistent geopolitical uncertainties are weighing on export prospects and weakening investor confidence internationally. Against this backdrop, the MPC’s decision to front-load support to domestic growth, especially for our domestic growth drivers, which might be affected by tariffs such as the MSMEs, is a welcome move.”

Nilesh Shah, MD, Kotak Mahindra AMC, said, “The RBI has equipped the Indian Economy with helmet (liquidity) , Bat and other accessories (interest rate cut) and pep talk (change of stance to accommodation) so that it can play on a green top wicket in a cold and cloudy (geo economical and political environment) morning against the seaming, fast and unpredictable bowling of President Trump. This is the best the coach can do. Now the players have to play it out so that we can score runs when the weather clears and pitch eases.”

Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “The RBI‘s decision to reduce the repo rate is significant for the economy amid ongoing tariff concerns and global headwinds. This timely action aims to relieve liquidity constraints and boost business confidence. The rate cut is expected to boost investor sentiment, improve financing conditions, and accelerate momentum in demand. Specifically, it is expected to make home loans more affordable and spur growth in the mid-range and affordable housing markets. The RBI’s continued policy support underscores its commitment to balancing economic growth with macroeconomic stability.”

Amar Ambani, Executive Director, Yes Securities, said, “The RBI’s decision to cut interest rates is driven by the achievement of inflation control, particularly through a sharp moderation in food inflation. Headline inflation has eased in Jan-Feb 2025. Expectations of a normal monsoon and no El-Nino effects have reduced uncertainties around Rabi crops, contributing to a positive food inflation outlook. Inflation is now expected to align with the 4% target over the next 12 months. Falling crude prices further support this outlook.

Growth, meanwhile, is still recovering from the lows of 1HFY25. Given the benign inflation outlook and moderate growth, policy support was warranted. We had expected the MPC to shift its stance to ‘accommodative’ in the last policy itself—it has come through this time. The stance change allows for further rate cuts as inflation pressure eases. With global growth facing headwinds from renewed trade tariffs, the RBI’s move rightly aims to bolster domestic demand, supported by improved liquidity in the system.”

Ajay Srivastava, Managing Director & CEO, Indian Overseas Bank, said, “For Micro, Small, and Medium Enterprises (MSMEs), this reduction is likely to lower the cost of borrowing, thus the capacity of MSMEs to grow and innovate. As MSMEs contribute to approximately 30% of India’s GDP and provide jobs for around 110 million individuals, access to credit can highly enhance economic growth. Retail consumers will gain from cheaper loan prices, which will enhance the spend by consumers and add to overall economic health. In agriculture, reduced interest rates can make it possible for farmers to invest in newer machinery and more environmentally friendly forms of farming, leading to improved productivity and farm revenues. Agriculture remains a pillar of the Indian economy with more than 40% of India’s population working in the sector; thus, credit support to the sector is crucial to India’s overall economic stability.”

Sonal Varma, Managing Director and Chief Economist (India and Asia ex-Japan), Nomura, said, “The RBI has delivered a dovish 25bp rate cut. The combination of downgrades to its GDP growth and inflation projections and the change in stance to accommodative all reinforce that this is a dovish cut. With inflation at target, the MPC’s focus is supporting growth, amid rising downside risks to growth from US tariffs. Despite the growth forecast downgrade, the RBI’s FY26 GDP forecast of 6.5% still appears optimistic to us. We believe the combination of direct and indirect effects will result in GDP growth slowing more sharply to around 6% in FY26, and risks are skewed to the downside. Hence, we expect the rate cutting cycle to continue, with a 25bp cut each in June and August.”

Reacting on decisions announced by the RBI MPC today, Bajaj Broking Research said, “With these strategic policy moves, the RBI aims to cushion the impact of global economic volatility while addressing domestic slowdown concerns. The combination of rate cuts, a supportive policy stance, and forward-looking regulations is intended to bolster financial stability, catalyze credit flow, and pave the way for stronger and more resilient economic growth.”

Suvodeep Rakshit, Chief Economist, Kotak Institutional Equities, said, “We see RBI’s change in stance to ‘accommodative’ as an intent for a deeper rate cut cycle. This is in line with our view of another 75-100 bps of rate cuts in FY2026E, implying repo rate at 5-5.25% by end-FY2026E. The benign outlook on inflation (favorable monsoon, lower crude oil prices to offset INR depreciation) and downside risks to growth will provide room for this deeper rate cut cycle. The RBI’s focus remains on addressing growth concerns as inflation is expected to remain around the 4% handle. We also expect the RBI to keep liquidity conditions ample to ensure smooth monetary policy transmission.”

Bharat Dhawan, Managing Partner, Forvis Mazars in India, said, “The RBI’s rate cut is a timely step to keep the economy on track as global uncertainties rise. Banks are well-placed to lend more actively, and with inflation expected to ease further, consumers could feel more confident about big-ticket purchases. Many sectors are going to benefit from the rate cut. With borrowing costs now slightly lower, homebuyers and developers could find more breathing room, giving a welcome push to the real estate sector. On the rural side, strong farm activity is likely to boost income levels, which may support spending in smaller towns and help keep consumption steady. RBI’s stance has shifted from neutral to accommodative now, which means RBI may go for another 25-bps cut in the second half of 2025, especially as the focus gradually shifts toward reviving demand and encouraging investment in a slowing global environment. Overall, the policy balances caution with action, aiming to protect growth without losing sight of inflation risks.”

Siraj Saiyed, Director, Arete Group, said, “The RBI‘s calibrated decision to cut the repo rate for the second time in a row is a clear signal towards supporting long-term economic stability amidst global uncertainties. While the immediate impact on industrial real estate may be neutral, the rate cut strengthens financing sentiment, which indirectly aids infrastructure expansion and large-scale park developments. Lower borrowing costs can encourage greater capital investments over time—especially in logistics, warehousing, and manufacturing-linked infrastructure. The move, though not instantly transformative, sets a positive tone for long-term project planning and private participation in industrial ecosystem development.”

Vishal Raheja, Founder & Managing Director, InvestoXpert.com, said, “For the real estate sector, the rate cut of 25 basis points is a welcome development. Lower interest rates will reduce the cost of borrowing for homebuyers and developers, which is likely to stimulate housing demand and improve overall market confidence. With India’s GDP growth projected to remain strong, this monetary easing is expected to further strengthen consumption and investment cycles. We remain optimistic that such policy support will sustain the sector’s growth trajectory in the coming quarters.”

Sunil Sisodiya, Chairman and CEO of Neworld Developers, said, “The 25 basis point cut in the repo rate to 6% is a positive and timely move that will directly benefit the residential real estate segment. Lower home loan interest rates are a significant enabler for homebuyers, especially first-time buyers, and will help in converting pent-up demand into actual sales. At a time when affordability and sentiment play a key role in decision-making, this rate cut will act as a strong catalyst for housing demand across segments. With India’s economic outlook remaining resilient, we believe this supportive monetary stance will provide further momentum to the housing market and encourage sustained growth in residential real estate in the coming quarters.”

AM Karthik, SVP & Co- Group Head, ICRA Ltd, said, “While we await the details, guidelines to harmonise gold loan practices across lenders augurs well for the segment, given the sharp growth in loan book driven by the gold prices and favourable demand dynamics, as unsecured and personal credit slowed since H2FY2024. With the elevated gold prices at present and the currently favourable risk profiles of the NBFCs in this space, considering the liquid nature of the security, the near-term impact on account of regulatory tightening should be manageable. However, competitive pressures for NBFCs could increase going forward, which remains monitorable.”

Ashwani Dhanawat, Executive Director and Chief Investment Officer, Shriram General Insurance, said, “The Reserve Bank of India decision to reduce the repo rate by 25 basis points to 6% and adopt an accommodative stance reflects a strategic pivot to support economic growth amid the escalating global tariff war. This policy shift, effective immediately, adjusts the SDF rate to 5.75% and MSF rate to 6.25%, aiming to stimulate domestic investment and consumption as trade frictions erode export performance and global growth decelerates. With FY26 GDP growth projected at 6.5% and CPI inflation at 4%, the RBI anticipates a manageable balance, potentially aided by softer commodity prices. However, persistent external pressures could challenge these projections, necessitating vigilant oversight to mitigate inflationary risks while fostering resilience in key sectors such as real estate and infrastructure.”

Marzban Irani, CIO of Fixed Income at LIC Mutual Fund, said, “The Reserve Bank of India announced a 25-basis point rate cut, bringing the repo rate down to 6% from 6.25% which is in line with market expectations. The policy stance has shifted from neutral to accommodative, indicating the possibility of further rate hikes. The RBI assured that liquidity will be infused as required, offering comfort to the markets. Forward projections may remain optimistic, with inflation expected to stay around 4% and GDP (Gross Domestic Product) growth projected at 6.5%. Given the benign inflation outlook, the RBI is likely to focus on growth through monetary stimulus measures. Overall, the policy is viewed as positive for fixed income markets.”

Binod Kumar, MD & CEO, Indian Bank, said, “The RBI‘s 25 basis points reduction in the repo rate to 6% is a timely intervention. Change in stance to accommodative is sentimentally positive, allowing room for better liquidity and growth. Together, they will support both MSME and retail demand. The MSME sector which contributes nearly 30% to India’s GDP and accounts for over 40% of exports, will benefit from this move as it will ease credit costs and improve cash flows, which are critical for recovery and growth in the evolving market dynamics. We foresee improved credit appetite at Indian Bank as MSMEs form a vital part of our lending portfolio. Increasing scope of co-lending will further strengthen lending to these sectors.”

RBI Governor Sanjay Malhotra, during the post-policy presser, clarified on his announcement on gold loans as he said, “Never said tightening in my statement with regard to gold loan guidelines.” He further added, “Let’s wait for the guidelines on gold loans. Will be issued soon.”

Earlier, Sanjay Malhotra had said, “Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities for both consumption and income-generation purposes. In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans.”

Gold loan guidelines to be more of a rationalisation initiative. Announcement likely soon

While maintaining that the RBI cannot give a number on the amount of surplus liquidity, RBI Governor Sanjay Malhotra said, “We will keep liquidity sufficiently surplus.”

On inflation concerns, RBI Governor Sanjay Malhotra said that more than inflation, the central bank is concerned about tariff impact on growth. “Inflation can move both ways reacting to current uncertainties,” he said during the post-policy presser.

RBI Governor Sanjay Malhotra, during the post-policy presser, said, “Globally forecast for growth has declined by 20-30 bps for this year and next.” He further maintained that growth estimate revised lower mainly due to global uncertainty.

Dharmakirti Joshi, Chief Economist, Crisil, said, “The monetary policy met expectations with a 25 basis points (bps) rate cut. With downside risks to growth greater compared with the February policy and inflationary pressure weaker due to falling crude prices, a rate cut was a foregone conclusion. The shift in stance supports the durability of the rate reduction cycle, and we anticipate at least two more rate cuts of 25 bps each within the fiscal year.

RBI, too, has cut its growth forecast to 6.5% due to rising uncertainty and downside risks from tariff-related developments. Given the numerous moving parts, forecasts are now less reliable. Nonetheless, in our base case, we project India to grow at 6.5% with risks tilted to the downside and inflation rate of 4.3% in fiscal 2026. The downside risks to growth come from rising uncertainty, which impairs decision making, and the impact of tariffs and slowing global growth on exports.”

Sonal Varma, Managing Director and Chief Economist (India and Asia ex-Japan), Nomura said, “With inflation at target, the MPC’s focus is supporting growth, amid rising downside risks to growth from US tariffs. Despite the growth forecast downgrade, the RBI’s FY26 GDP forecast of 6.5% still appears optimistic to us. We believe the combination of direct and indirect effects will result in GDP growth slowing more sharply to around 6% in FY26, and risks are skewed to the downside. Hence, we expect the rate cutting cycle to continue, with a 25bp cut each in June and August.”

US Treasuries extended heavy losses today in a sign investors are dumping even their safest assets as a global market rout unleashed by US tariffs takes an unnerving turn towards forced selling and a dash for the safety of cash.

The 10-year US Treasury yield was unmoored and long bonds were the focus of intense selling from hedge funds which had borrowed money to bet on usually small gaps between cash and futures prices.

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS says, “We believe NBFCs like Bajaj Finance, Shriram Finance, SBI Cards and Cholamandalam Inv. & Fin. would benefit not only from the rate cuts but also from the RBI’s decision to roll back the higher risk weight on bank loans to NBFCs. Amongst banks, we prefer large private banks like HDFC Bank, Kotak Bank and ICICI Bank”.