Delhi Delhi: According to Goldman Sachs, the Reserve Bank of India (RBI) is expected to reduce the repo rate by 25 basis points (bps) to 6.00 percent after the ongoing Monetary Policy Committee (MPC) meeting.
“We expect the RBI Monetary Policy Committee (MPC) to cut the repo rate by 25 basis points at its April 9 meeting, taking the repo rate to 6.00 percent,” the report said. Also, the report said it expects a 5.50 percent repo rate by the end of the year.
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The financial services company said several factors have created a favorable environment for the RBI to ease policy rates. It said high-frequency data indicated domestic economic activity showed signs of moderation in the first quarter.
Inflation is expected to remain soft, with the financial services firm estimating March consumer price index (CPI) inflation at 3.7 per cent.
Further, the sharp drop in Brent crude oil prices and the US dollar index (DXY) following President Trump’s recent tariff announcements has contributed to RBI’s likely decision to cut rates, as anticipated by the firm.
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The report said the banking system’s liquidity surplus which stands at around Rs 1 trillion (about 0.5 per cent of net demand and time liabilities) is a result of consistent liquidity injections by the RBI, including the Rs 800 billion open market operation (OMO) purchases announced last week.
“With inter-bank overnight rates now trading below the repo rate, in our view, the monetary policy stance at this policy meeting (currently neutral) is less relevant from a forward guidance perspective on liquidity,” the report said.
Goldman Sachs also revised its economic growth forecasts for India. Citing US tariff hikes and a slowdown in services exports, it lowered its real GDP growth forecast for 2025 by 30 basis points to 6.1 per cent.
