SBI Predicts 75 Basis Points Rate Cut Amid Falling Inflation
New Delhi, March 13: A 75-basis-point rate cut could be on the horizon as SBI Research’s Ecowrap report projects a steady decline in inflation, prompting expectations of successive rate cuts in April and June 2025.
Analysts foresee CPI inflation easing to 3.9% in Q4 FY25, with an annual average of 4.7%. Looking further ahead, inflation in FY26 is expected to hover between 4.0% and 4.2%, with core inflation at 4.2%-4.4%.
“With benign inflation this month and going forward, we expect a cumulative rate cut over the cycle to be at least 75 basis points, with successive rate cuts in April and June 2025. The rate cut cycle could resume in October 2025 after a pause in August,” the report stated.
India’s consumer price index (CPI) inflation dropped to a seven-month low of 3.6% in February 2025, largely attributed to a sharp decline in food prices.
Despite the decline in domestic inflation, imported inflation surged dramatically, rising from 1.3% in June 2024 to 31.1% in February 2025.
India’s industrial production (IIP) showed robust growth, rising to 5% in January 2025 from 3.2% in December 2024.
The corporate sector also demonstrated resilience, despite economic uncertainties.
With falling inflation, an expected rate cut cycle, and stable corporate earnings, India’s economy appears to be on a stable trajectory. However, rising imported inflation and global economic uncertainties remain potential challenges.
As the Reserve Bank of India (RBI) prepares for its next monetary policy review in April 2025, all eyes will be on how the central bank balances rate cuts while managing global risks and currency volatility.
SBI research, rate cut, inflation trends, Indian economy, monetary policy, RBI policy, CPI inflation, industrial growth, corporate earnings, food inflation, global economic risks
This post was published on March 13, 2025 11:11 am
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