As RBI Governor Sanjay Malhotra prepares to unveil the June policy decision, analysts are split between a cautious 25 bps cut and a bold 50 bps move to boost credit and investment.
New Delhi | June 6, 2025 –
All eyes are on the Reserve Bank of India (RBI) today as the central bank’s Monetary Policy Committee (MPC) wraps up its three-day meeting and announces its decision at 10 a.m. RBI Governor Sanjay Malhotra is widely expected to slash the repo rate, but the scale of the cut — 25 or 50 basis points (bps) — remains a point of intense debate among economists and market participants.
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What the Street Expects
Most brokerages, including Nirmal Bang and JM Financial, predict a 25 bps cut, citing RBI’s cautious and calibrated approach. However, a growing section of analysts, including SBI Securities, believes this is the right time for a “jumbo” 50 bps cut to support credit growth and maintain domestic momentum amid a weakening global outlook.
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According to Stoxkart CEO Pranay Aggarwal, “Soft inflation data and moderate demand trends give the RBI room to act. A deeper cut could energize the economy, although global uncertainties may keep the central bank cautious.”
Why a Bigger Cut Could Make Sense
Supporters of a 50 bps cut point to several tailwinds:
- Inflation remains under control, with FY26 expected to average around 3.5%.
- GDP growth, though robust in Q4 FY25, is projected to slow to 6.5% for FY25 overall.
- Liquidity remains in surplus, with fewer concerns on financial stability.
- A deeper rate cut could help offset global trade headwinds and boost private investments.
“Given that liabilities are being repriced faster and the credit growth has moderated, a bold rate cut can support financial intermediation and revive capex momentum,” said SBI Securities.
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Why the RBI Might Stay Cautious
On the other side, critics of an aggressive rate cut argue:
- The RBI could prefer gradual easing, leaving room for further cuts through FY26.
- A 50 bps cut might narrow the interest rate differential with the US, potentially impacting capital flows.
- The central bank may wait to see how global trade negotiations and tariffs evolve, especially as US-China dynamics remain fluid.
According to JM Financial, “Despite easing inflation, strong Q4 GDP numbers and global tariff volatility may limit the scope for a front-loaded rate cut.”
Conclusion
The RBI faces a delicate balancing act — between supporting domestic growth and preserving macroeconomic stability. Whether it opts for a moderate 25 bps cut or a more decisive 50 bps reduction, the central bank’s forward guidance will be equally crucial in shaping market sentiment going forward.
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RBI policy, repo rate cut, RBI June 2025, RBI Governor Sanjay Malhotra, MPC meeting, Indian economy, interest rates, inflation India, credit growth, SBI Securities, Stoxkart, Nirmal Bang, JM Financial