RBI Governor Hints at Further Rate Cuts After Two Successive Reductions

In a significant development that may bring further relief to borrowers, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday signaled the possibility of another interest rate cut in the coming months. This comes on the heels of two consecutive 25 basis point reductions in the key policy rate.

Unveiling the central bank’s April monetary policy, Governor Malhotra announced a shift in the RBI’s monetary stance from ‘neutral’ to ‘accommodative’, a move widely interpreted as a precursor to further easing of interest rates. The next bi-monthly monetary policy review is scheduled for June 6.

“In the context of the RBI, the stance of monetary policy signals the intended direction of policy rates going forward,” Malhotra stated during the press briefing, reinforcing market expectations of continued monetary easing.

This shift in policy stance is seen as a response to evolving macroeconomic conditions, including moderating inflation and a need to stimulate consumption and investment. A further cut in the repo rate, currently at 6.25%, could lead to lower EMIs for home, auto, and personal loans, providing much-needed support to consumers and the broader economy.

Economists and analysts now anticipate at least one more rate cut in the June policy, depending on the inflation trajectory and global economic cues.

The RBI’s dovish tone has been welcomed by industry leaders, who view it as a proactive step towards fostering economic growth amid lingering global uncertainties.