RBI Expected to Cut Rates in April, Signaling Shortest Easing Cycle in Decades

With inflation at a seven-month low and growth slowing, the Reserve Bank of India is likely to deliver a 25 bps rate cut in April, followed by one final cut in August, according to a Reuters poll.

BENGALURU, March 28:
The Reserve Bank of India (RBI) is widely expected to cut interest rates at its upcoming April 7-9 meeting, marking the second straight cut and potentially concluding the shortest rate-easing cycle in India’s recent economic history, according to a Reuters poll of economists.

The central bank’s decision is being driven by easing inflation, which dipped to a seven-month low of 3.61% in February, and sluggish economic growth, forecast to slow to 6.4% in FY2025, its weakest in four years.

A strong majority—54 out of 60 economists polled between March 18–27—believe the RBI will cut the benchmark repo rate by 25 basis points to 6.00%. One economist predicted a steeper 50 bps cut, while five forecast no change.

“There are not many strong growth drivers going into FY26. They (RBI) need to sustain their support to growth. Inflation has created room for easing,” said Dhiraj Nim, economist at ANZ.

The RBI has already pumped around ₹5.3 lakh crore (~$64 billion) into the banking system in recent months to support liquidity, a necessary step for effective rate transmission into the real economy. However, economists caution the full impact may take a few more months.

“If transmission needs to happen, especially in a rate-cutting cycle, liquidity needs to be on the positive side,” said Indranil Pan, Chief Economist at Yes Bank.

📉 Shallowest Rate-Cut Cycle in Two Decades

The poll projects the RBI will hold rates at 6.00% through June, followed by a final cut to 5.75% in August. That would mark a total of just 75 basis points in cuts, making this the shallowest easing cycle since the early 2000s, when the repo rate became the RBI’s key policy tool.

“We always expected a maximum of three rate cuts from the RBI,” said Sakshi Gupta, Principal Economist at HDFC Bank. “Beyond April, we’re split between June and August.”

After the expected August cut, economists forecast a prolonged pause in rate changes, likely until at least mid-2026, unless global factors like U.S. Fed policy or capital outflows force a rethink.

As the RBI prepares to meet in April, all eyes are on Governor Shaktikanta Das and the Monetary Policy Committee, whose decisions could shape the trajectory of India’s monetary environment for the rest of the year.