) cut the repo rate by 25 basis points (bps) to 6.25 per cent on Wednesday, aligning with market expectations, while pivoting to an “accommodative” stance amid rising global headwinds and domestic growth-inflation dynamics. Economists widely interpreted the move as a signal of deeper monetary easing ahead, with most projecting at least 50 bps of additional rate cuts in FY26, potentially front-loaded.
All seven economists quoted unanimously expect the RBI to cut rates by another 50 bps this fiscal year, bringing the repo rate down to 5.75-5.50 per cent by March 2025. The central bank’s dovish pivot, coupled with lowered growth and inflation forecasts, showed its intent to prioritise growth.
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Siddhartha Sanyal, Chief Economist, Bandhan Bank, said, “The baseline expectation is at least another 50 bps cut, potentially front-loaded.”
Madan Sabnavis, Chief Economist, Bank of Baroda, also stated, “We may see repo at 5.5% by March, with cuts likely after monsoon clarity.”Inflation Comfort, Growth risks drive policy shift
The RBI slashed its FY26 GDP growth forecast to 6.5 per cent (from 6.7 per cent) and CPI inflation projection to 4 per cent (from 4.2 per cent), citing global trade tensions, softer commodity prices, and manageable food inflation risks. Economists, however, flagged concerns that even these revised estimates may be optimistic.
Sonal Varma, Chief Economist (India and Asia ex-Japan), Nomura, argued, “India’s GDP growth could slow to 6 per cent due to direct/indirect tariff impacts. Risks are skewed downward.”
Aditi Nayar, Chief Economist, ICRA, added, “Global uncertainty justifies 50 bps more cuts over the next three reviews.”
Liquidity Management
Governor Das emphasised maintaining systemic liquidity surplus at 1 per cent of NDTL (Net Demand and Time Liabilities), a move economists linked to ensuring effective transmission of rate cuts. While no fresh liquidity measures were announced, experts expect proactive infusions.
Gaura Sen Gupta, Chief Economist, IDFC FIRST Bank, stated, “Another Rs 4 trillion of durable liquidity infusion is needed to sustain surplus liquidity for transmission.”
Indranil Pan, Chief Economist, YES BANK, said, “RBI’s focus on inflation alignment with 4% target opens room for deeper cuts.”
Global Risks, Cautious optimism guide outlook
While the RBI struck a dovish tone, economists cautioned about volatile oil prices, geopolitical risks, and spillovers from U.S.-China tariff wars. Radhika Rao, Senior Economist, DBS Bank, highlighted, “Guidance remains dovish, but global uncertainties necessitate stability measures.”
Siddhartha Sanyal added, “Front-loaded cuts are likely as RBI balances growth support with external shocks.”
The RBI’s pivot to an accommodative stance marks a decisive shift toward reviving growth amid global turbulence. With inflation projected at target and liquidity conditions set to ease, economists now see a clear runway for cumulative 75 bps cuts in FY26 (including today’s 25 bps). As Madan Sabnavis, Chief Economist, Bank of Baroda said, “Monsoon holds the key to timing, but 5.5% repo by March is plausible.”
