RBI likely to cut rates on April 9 amid global tariff heat

As global trade tensions rise due to tariff hikes, attention is now shifting to the Reserve Bank of India’s (RBI) next policy move, scheduled for April 9. According to a CNBC-TV18 poll of top bankers, economists, and bond dealers, the RBI’s Monetary Policy Committee (MPC) is expected to acknowledge these global risks but remain focused on domestic factors.

Most experts believe that the RBI could cut interest rates in April and June to support the economy before global issues start to bite. All respondents to the poll expect a 25-basis point (bps) rate cut in the upcoming policy meeting. With inflation cooling, economic growth slowing, crude oil prices falling, and US bond yields dipping, many believe the RBI now has the room to act.

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However, there is some debate on the tone the RBI will take. About half expect the central bank to shift to an ‘accommodative’ stance, which means it would be more open to further rate cuts. But 40% feel the RBI may stick to a ‘neutral’ stance, keeping its options open due to the uncertainty in global markets.

Most believe the terminal repo rate—the lowest point the interest rate might reach in this cycle—could settle around 5.5%, suggesting a total rate cut of up to 75 basis points in this cycle.

On the liquidity front, no big surprises are expected. The RBI has already taken steps to ease tight liquidity by using tools like open market operations (OMOs), currency swaps, and longer-tenure repo auctions, and it may continue with these measures. More liquidity moves would be seen as positive by the market.

Also Read: Nomura expects RBI to cut rates in April, but Fed to wait till Dec

Higher global tariffs could impact India’s gross domestic product (GDP) growth by 30 to 60 basis points, according to economists. But for now, most expect the RBI to leave its growth forecast unchanged, although some foresee a slight downgrade.

On inflation, which is currently lower than the RBI’s estimates, 60% of experts expect no change, while 40% believe the RBI might revise its inflation forecast slightly lower to around 4–4.1%.

Also Read: Economists trim growth forecasts, RBI rate cuts back in focus

Overall, the tone of the policy is expected to be dovish, as the central bank balances global risks with the need to support domestic growth. With inflation under control, the RBI may start laying the groundwork for further rate cuts in the coming months.

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