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RBI to shift focus from inflation to growth in April policy meeting, cut repo rate by 25 bps: Care Edge

01 Apr 2025 Evaluate

Care Edge Ratings has asserted that the Reserve Bank of India’s (RBI) monetary policy committee is expected to shift its focus from concerns around inflation to supporting growth in its next review meeting in early April. The rating agency in a report said the monetary policy committee will go for another 25-basis-point reduction in the repo rate at April 7-9 meeting. It also anticipates RBI to maintain a ‘neutral’ stance amidst global headwinds.

The report said ‘We expect the policy statement to have a dovish undertone, even while remaining cautious about global developments’. The upcoming monetary policy meeting in April takes place amid a significant moderation in headline inflation over recent months, aided by lower food inflation. In February, the RBI unanimously lowered the repo rate by 25 basis points from 6.5 per cent to 6.25 per cent, in what was the first rate cut in about 5 years since Covid.

According to Care Edge, inflation is expected to remain closer to the RBI’s 4 per cent target over the next three quarters. Retail inflation fell to 3.6 per cent in February, marking the lowest level in seven months. The sustained decline in food and beverage inflation contributed to this lower inflation rate. Inflation in the food and beverages category decreased to 3.8 per cent in February, down from a peak of 9.7 per cent in October 2025, marking the lowest figure since May 2023. Vegetable inflation is also under control.

It noted ‘Falling inflation will provide the RBI with the necessary flexibility to prioritize growth concerns’. While India’s economic growth momentum rebounded in Q3 FY25, with a 6.2 per cent growth rate, up from 5.6 per cent in Q2 2024-25, it remains below potential. Moreover, external factors such as global policy uncertainty, risks from reciprocal tariffs, slower global growth, and geopolitical tensions will continue to pose challenges to domestic growth momentum. 

With food inflation moderating and core inflation under control, the RBI could overlook concerns around imported inflation in midst of the global trade war. RBI will also take cue from global developments, for instance if the Fed cuts rates to support its economy, the pressure on Indian rupee may ease, giving the RBI more room for further rate cuts. Overall, Care Edge said both global and Indian markets are expected to remain volatile till trade policy uncertainty remains elevated.


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