The Monetary Policy Committee (MPC), led by Malhotra, began a three-day meeting on Monday to decide what the next step in India’s credit policy is.
What happened in February?
Back in February, the Reserve Bank of India had lowered its repurchase rate by 25 basis points to 6.25%. This is the first cut in nearly three years, and experts believe the rate of cuts may be slowed this week due to inflation regulation and demand to boost economic growth.
U.S. President Donald Trump announced a 26% mutual tariff in India, which will take effect the same day as the Reserve Bank of India policy was announced, a major development worldwide.
Why tax rates may be reduced
“Monetary Policy Statement by RBI Governor @GovSMalhotra at 10:00 AM (on April 9),” the central bank posted on X.HSBC Global Research said, “We expect the RBI to deliver a 25 bps repo rate cut in April, taking the repo rate to 6 per cent. We also expect it to discuss/implement steps that help sustain liquidity at surplus levels. We believe the RBI may lower its growth and inflation forecasts. Following the lower tax rates in April, we expect two 25bb reductions in June and August meetings, respectively, to raise the repo rate to 5.5%, which is our estimate of neutrality.
“…Our expectations for title inflation for CY25 in the fourth quarter were below 4%, and we added 50 barrels of repo rate reduction in CY25, which totaled 100 bps of the storage rate reduction in this cycle.”
Who decides the rate?
The Monetary Policy Committee is composed of RBI Governor Sanjay Malhotra, two other senior officials from the RBI and three external members appointed by the government.
