RBI Likely to Cut Rates Again in April as Focus Shifts from Inflation to Growth: Care Edge

With inflation easing and global uncertainties looming, RBI expected to lower repo rate by 25 basis points and maintain a neutral stance, according to Care Edge Ratings.

New Delhi, March 30: As India’s inflation shows sustained signs of moderation, the Reserve Bank of India (RBI) is expected to shift its focus from curbing price rise to stimulating economic growth in its upcoming monetary policy meeting scheduled for April 7-9, according to Care Edge Ratings.

The agency predicts another 25-basis-point cut in the repo rate, following February’s cut from 6.5% to 6.25%—the first rate reduction in five years. With the headline retail inflation falling to a seven-month low of 3.6% in February, Care Edge suggests the RBI now has more flexibility to prioritize economic momentum.

“Falling inflation will provide the RBI with the necessary flexibility to prioritize growth concerns,” the report noted.

Easing Inflation, Neutral Policy Stance Expected

The report highlights a sharp drop in food and beverage inflation—from 9.7% in October 2025 to just 3.8% in February—as a key driver of overall inflation softening. With inflation projected to remain around the 4% target over the next three quarters, Care Edge believes the RBI will maintain a “neutral” policy stance while adopting a dovish tone.

“We expect the policy statement to have a dovish undertone, even while remaining cautious about global developments,” Care Edge added.

Global Headwinds Still a Concern

Despite a rebound in India’s growth (6.2% in Q3 FY25 from 5.6% in Q2), the agency cautioned that external risks—such as global policy uncertainty, a potential trade war, and geopolitical instability—continue to threaten domestic growth momentum.

One major event being closely watched is President Trump’s planned announcement of reciprocal tariffs on April 2. The move, part of his “Fair and Reciprocal Plan,” could significantly impact India’s trade outlook and financial markets.

“If the Fed cuts rates to support the US economy, the pressure on the Indian rupee may ease, giving the RBI more room for further rate cuts,” Care Edge added.

Looking Ahead

With food inflation cooling and core inflation under control, the RBI may take a pragmatic view on imported inflation and focus on growth. However, volatility in global and Indian markets is likely to persist as trade policy remains uncertain.

As India braces for a possible second rate cut in April, market watchers will be eyeing both the RBI’s tone and international developments—especially around trade and interest rate decisions in the US.