India Ratings and Research predicts a 25 basis points cut in the Reserve Bank of India's policy rates in April 2025, driven by easing inflation.

Median forecasts indicate that the RBI will maintain the repo rate at 6.00% during its June meeting, with some analysts expecting a reduction to 5.75% by August.

The real repo rate is anticipated to stabilize at 1.5% in FY26, assuming an average inflation rate of 4.0%, although deeper cuts could occur if inflation is adversely affected by tariffs.

Experts warn that the success of these rate cuts hinges on improved banking sector liquidity and favorable global economic conditions.

Economists are advocating for rate cuts to stimulate consumption and investment, which have seen significant slowdowns.

Despite these liquidity measures, economists believe it may take several months for rate cuts to positively influence the broader economy.

Ind-Ra's Chief Economist, Devendra Kumar Pant, noted that if U.S. reciprocal tariffs significantly impact the economy, further rate cuts by the RBI may be necessary.

While one economist predicts a more aggressive cut of 50 basis points, five others foresee no change in rates during the upcoming meeting.

Fiscal policy remains aligned with the government's goal of deficit reduction, continuing the consolidation roadmap established in the FY25 budget.

This anticipated easing cycle is set to be the shortest on record, with a total of 75 basis points of cuts expected since the cycle began.

Experts caution that the rate-cutting cycle may be shallow and subject to global economic influences, including capital outflows and actions by the U.S. Federal Reserve.

To bolster liquidity, the RBI has injected approximately $64 billion into the banking system, a crucial step for the effectiveness of any rate cuts.