With the US Fed maintaining interest rates and signaling cuts in 2025, analysts predict that the RBI may follow suit, easing liquidity and boosting market sentiment.
March 20, 2025: The Reserve Bank of India (RBI) could announce another repo rate cut in April 2025, following the US Federal Reserve’s decision to maintain rates at 4.25%-4.50% while indicating two rate cuts later this year.
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In February 2025, the RBI initiated its rate-cut cycle by reducing the repo rate by 25 basis points (bps) to 6.25% from 6.5%. With the Fed’s cautious optimism and a strong domestic growth outlook, analysts suggest another RBI rate cut may be imminent.
Global & Market Implications
Financial experts believe the Fed’s decision has eased global market pressures, allowing emerging market (EM) central banks, including RBI, to have greater policy flexibility.
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Madhavi Arora, Lead Economist at Emkay Global, noted:
“The RBI’s liquidity easing efforts will soon turn into a surplus, making an April rate cut highly likely, with another cut possible ahead.”
Why a Rate Cut Is Expected?
Several factors point toward a potential RBI rate cut in April 2025:
1. Favorable Liquidity Conditions
- RBI has been easing liquidity to support economic activity.
- Lower inflation in India provides room for policy adjustments.
2. Global Rate Cut Expectations
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- The US Fed signaled two rate cuts in 2025, setting a precedent for global monetary policy easing.
- Analysts believe lower US rates will boost capital inflows into India, strengthening the rupee.
3. Market Stability & Growth
- Sensex and Nifty 50 rallied post-Fed decision, signaling investor optimism.
- The Indian economy grew by 6.2% in Q3 FY25, supporting pro-growth monetary policies.
Impact on Markets & Borrowers
A repo rate cut in April would mean:
- Lower borrowing costs for businesses and individuals.
- Increased liquidity, encouraging investment and consumer spending.
- Boost for the stock market, as lower rates make equities more attractive than debt instruments.
Will RBI Cut Rates in April?
While uncertainty remains, experts believe a 25 bps repo rate cut is highly likely in the April 2025 RBI policy review. The Fed’s cautious stance, improving liquidity, and stable economic growth make a rate cut a strong possibility.
Investors will closely watch how the RBI balances domestic growth objectives with global economic headwinds in the coming months.
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RBI Repo Rate Cut, US Fed Interest Rate, Indian Stock Market, Monetary Policy, Inflation Control, Indian Economy, RBI Policy April 2025, Nifty 50, Sensex Rally, Market Liquidity