To review and decide on the country’s benchmark interest rates, commonly referred to as repo rates, the Reserve Bank of India (RBI) is set to begin its bi-monthly policy meeting on Monday (April 7). As the first monetary policy review for the financial year 2025-26, everyone must have quite the expectation, specifically when it comes to lending rates, which is said to be made public on Wednesday, April 9.

With this, let’s look into the noteworthy insights ahead of theRBI MPC meeting. Below are key highlights for your quick reference compiled by Bajaj Broking Research:

RBI Rate Cut (Feb 2025) 

The RBI reduced the repo rate by 25 basis points to 6.25% to stimulate growth amid moderating inflation. Economists expect another 25 basis point cut to support growth, especially given recent external pressures.

US Tariff Impact 

The US imposed a 26% tariff on Indian imports. This is expected to reduce India’s GDP growth for FY2025-26 by 20–40 basis points, potentially lowering it to around 6.1% from the RBI’s earlier forecast of 6.7%. This may push the RBI toward further rate cuts to counter economic strain.

Inflation Outlook 

Retail inflation (Consumer Price Index) for FY2025-26 is projected at an average of 4.2%, with quarterly figures at 4.5% (Q1), 4% (Q2), 3.8% (Q3), and 4.2% (Q4). These manageable levels could offer the RBI room to adjust rates to support growth if needed.

New Deputy Governor Appointment 

Poonam Gupta, former World Bank and IMF economist, has been appointed as RBI’s new deputy governor. Known for supporting a relook at inflation targeting and a more flexible exchange rate policy, she is expected to bring fresh perspectives to policy discussions.

Liquidity Framework Proposals 

Indian lenders have suggested reforms to the RBI’s liquidity management framework. Key suggestions include moving from the 14-day variable rate repo to an overnight fixed-rate liquidity tool, adopting the Secured Overnight Rupee Rate (SORR) as a new benchmark, and reducing the Cash Reserve Ratio (CRR) to ease liquidity constraints.

So to say, the upcoming RBI policy meeting is set against a backdrop of moderating inflation, external economic challenges, and proposed changes in liquidity management. The MPC’s decisions will be crucial in balancing growth and price stability amid global uncertainties.