A new analysis by SBI Research predicts that the Reserve Bank of India (RBI) is likely to embark on a monetary policy shift in the first half of 2025, with expected interest rate reductions totaling 75 basis points. The report forecasts a moderate 25 basis point cut in February’s monetary policy meeting, followed by two consecutive rate reductions in February and April 2025. The report suggests a cautious approach to monetary easing, balancing growth objectives against inflationary pressures.
According to the analysis, the RBI may pause the easing cycle in June before potentially initiating a second phase of rate cuts in October 2025. The projected monetary policy trajectory is significant as it could have a substantial impact on India’s economic landscape in 2025.
The RBI is expected to balance growth and inflationary pressures by carefully staging its monetary easing, with the potential for interest rate reductions. This approach could lead to a boost in economic activity, which would be particularly welcome in light of the challenges posed by the COVID-19 pandemic and its lingering effects.
Overall, the analysis suggests that the RBI is adopting a measured approach to monetary policy, weighing the need for stimulus against the need to manage inflationary pressures. The outcome will be closely watched by market participants and analysts, who will be keen to gauge the potential impact on India’s economic outlook for 2025.