PTI New Delhi

The Reserve Bank on Monday started its bi-monthly monetary policy review amid expectations of a 25 bps cut in key interest rates in the backdrop of moderating inflation and the need to stimulate growth as Trump tariffs pose severe challenges to the global economy. The decision of the six-member Monetary Policy Committee (MPC) headed by Governor Sanjay Malhotra will be announced on Wednesday. 

In February, the MPC slashed the repo rate by 25 basis points to 6.25 per cent. It was the first reduction since May 2020 and the first revision after two-and-a-half years. Experts are of the opinion that RBI's rate-setting panel will announce another rate cut of 25 bps this week.

A research report of SBI said the global growth is likely to face significant headwinds due to non-linear yet intersecting trilemma of trade-related tariff barriers, rapid currency swings and fractured capital flows, with no country being immune to the disruptions. It further said the trajectory of rate action by central banks, while being accommodative, may remain fuzzy. 

"We expect a 25-basis point rate cut in April 2025 policy. Cumulative rate cut over the cycle could be at least 100 basis points, with 2 successive rate cuts over February and April 2025. With an intervening gap in June 2025, the second round of rate cuts could start from August 2025," said the research report from the State Bank of India's Economic Research Department - 'Prelude to MPC Meeting: April 7-9, 2025'.

Debopam Chaudhuri, Chief Economist, Piramal Group, said it is one of the rare occasions when a confluence of declining US interest rates, stronger rupee and domestic inflation dipping below the target level is emerging.