RBI Likely To Cut Rates By 25 BPS On June, August, Says Poll

The Reserve Bank of India (RBI) is likely to lower interest rates on June 6, 2025 and again in August, continuing its recent easing cycle to support a slowing economy, according to a Reuters poll conducted from May 19-28, 2025.

The repo rate is the interest rate at which the RBI provides loans to commercial banks. When banks face a shortage of funds, they borrow from the RBI at this rate to meet their short-term liquidity needs.

The RBI recently cut the repo rate twice this year, reducing it by 25 basis points (bps) in February and again in April 2025, bringing the rate down to 6 per cent amid improving inflation conditions. If the expected cuts happen, it would mark the RBI’s third consecutive rate reduction this year.

India’s economic growth slowed to 6.3 per cent last fiscal year, down from over 9 per cent the year before. Inflation remained below the RBI’s 4 per cent target, giving the central bank room to reduce rates further. Other major central banks are also easing policy amid rising global trade tensions.

According to the poll, 53 of 61 economists expect the RBI to cut the repo rate by 25 bps to 5.75 per cent at the conclusion of its June 4–6, 2026 monetary policy meeting. Two respondents forecast a larger 50-basis-point cut, while six believe rates will remain unchanged.

When it comes to August, 47 out of 58 experts predict that the repo rate will drop by another 25 basis points, to 5.50 per cent. Compared to the poll conducted last month, this indicates a significant rise in the likelihood of a second cut.

While most economists predict a total easing of 50 bps, a few anticipate additional cuts if trade tensions escalate especially if a US trade deal fails to materialise. Economist Dhiraj Nim was quoted by Reuters as saying that these global risks could prompt a stronger counter-cyclical response from the RBI if domestic inflation remains subdued.

Despite concerns about declining growth and high market valuations, another poll found that the Indian stock market will achieve new highs by the end of 2025. The poll also predicted that the economy would grow at an average pace of 6.30 per cent in the current fiscal year and 6.5 per cent in the next.