RBI Rate Cut in April? Experts Weigh In After US Fed Holds Interest Rates

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