RBI Hints at Repo Rate Cut as Economic Signals Shift

Goldman Sachs projects a 25bps reduction in RBI's repo rate to 6.00% after the Monetary Policy Committee meeting. Factors like moderation in domestic economic activity, benign inflation, and increased liquidity surplus contribute to this potential shift. Economic growth forecasts are also revised downwards.

In a key development, the Reserve Bank of India's (RBI) repo rate is expected to be lowered by 25 basis points to 6.00%, according to predictions by financial giant Goldman Sachs. The anticipated change comes after the ongoing Monetary Policy Committee (MPC) meeting, projected for April 9.

Several factors are at play favoring the RBI's rate cut. Domestic economic activity has shown signs of moderation, supported by high-frequency data. Inflation is also projected to remain under control, with March's Consumer Price Index (CPI) expected at 3.7%.

Additional considerations include falling Brent crude oil prices and a weakening US Dollar Index, influenced by recent US tariff changes. These elements have jointly paved the way for a possible rate reduction by the RBI, according to experts. Moreover, India's liquidity surplus within the banking system, bolstered by substantial RBI liquidity injections, underscores the potential for a drop in the repo rate.

(With inputs from agencies.)