The Reserve Bank of India (RBI) is widely expected to reduce interest rates by 25 basis points on June 6, marking the third consecutive cut, followed by another cut in August. This move aims to support India’s slowing economy amid global trade tensions and subdued inflation.

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• RBI likely to cut the repo rate to 5.75% in the June 4-6 meeting; majority of economists support a 25 bps cut, some predict 50 bps.
• Another rate cut expected in August, with key rate forecasted to fall to 5.50%, showing increased confidence in easing.
• India’s economic growth slowed sharply to 6.3% in FY25 from over 9% the previous year; inflation remains below RBI’s 4% target, allowing room for rate cuts.
• Global trade tensions, especially the US-China trade war, pose downside risks to India’s growth, prompting RBI’s accommodative stance.
• Total expected easing in 2025 is about 100 bps, the shallowest rate-cut cycle in over a decade.
• Indian stock markets forecast to reach new highs by end-2025 despite concerns over valuations, reflecting an optimistic economic outlook.
• GDP growth expected to average 6.3% in FY26 and 6.5% in FY27.
• Despite previous rate cuts, lending rates by banks have not eased significantly due to tight liquidity; deposit rates have fallen, though the reasons remain unclear.