RBI MPC Meeting Begins As Markets Expect A Rate Cut

Mumbai, June 4:  Reserve Bank of India’s Monetary Policy Committee (MPC) meeting to discuss changes in the key interest rates has begun. The three-day meeting started today, with the final decision expected on Friday.

Market expectations are high, with markets and analysts anticipating another 25-50 bps rate cut to boost economic growth amid global uncertainties triggered by fresh tariff actions from the US.

If the RBI decides to cut the rate even further, it would be the third consecutive rate cut in 2025. The central bank has already reduced the repo rate by 25 basis points each in February and April, bringing it to 6 per cent.

Could The RBI Cut Repo Rate By 50 BPS?

The current market discussions are centred on whether the RBI will adopt a defensive stance by cutting the repo rate by 25 bps or a more aggressive stance by cutting the rate by 50 bps to stimulate the economy. While more analysts are leaning toward a 25 bps cut, a more substantial move is not being ruled out, especially in light of falling inflation and soft economic indicators.

According to SBI Research, a 50 bps “jumbo cut” in June could be on the table, which can help stabilise the overall economy.

CareEdge Ratings added that it feels that same “jumbo cut” could be coming, as it will reduce inflation and allow the RBI to focus on supporting growth amid ongoing challenges such as uneven consumption recovery, subdued manufacturing, and sluggish private capital expenditure.

Why The “Jumbo Cut” Expectations?

India’s GDP growth of 7.4 per cent in the latest quarter has surpassed expectations. Yet, sectoral concerns persist, with a greater demand for further cutting of the repo rate.

“The upcoming MPC meet presents an encouraging window for a calibrated rate cut,” said Deepak Aggarwal, Co-founder and Co-CEO of Moneyboxx Finance. He highlighted that a low interest rate regime would aid credit flow to MSMEs and NBFCs, particularly those operating in rural and semi-urban areas.

Similarly, Raoul Kapoor, Co-CEO of Andromeda Sales and Distribution, noted that a third consecutive rate cut is widely anticipated. A cumulative reduction of 75 basis points in 2025 would be a significant boost to borrowers and investors.

How Would The Rate Cut Benefit?

Lower interest rates can increase consumption and investment by making borrowing more affordable. Mandar Pitale, Head of Financial Markets at SBM Bank (India), expects a 25 bps cut in the June MPC meeting, possibly followed by another in August.

Rohit Arora, CEO of Biz2X & Biz2Credit, noted that sustained inflation below 4 per cent and core inflation moderation support a 25–50 bps rate cut. He added that this move would particularly benefit sectors like MSMEs and housing.

What’s the Monetary Policy Committee (MPC)?

The six-member MPC comprises three officials from the RBI and three external economists:

• RBI Members: Governor Sanjay Malhotra, Deputy Governor M Rajeshwar Rao, and Executive Director Rajiv Ranjan
• External Members: Nagesh Kumar (Institute for Studies in Industrial Development), Saugata Bhattacharya (Economist), and Professor Ram Singh (Delhi School of Economics)

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