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RBI Monetary Policy Meeting: A 25 basis points (bps) rate cut is widely anticipated, marking the first reduction since the Covid-19 pandemic in May 2020; Know how to watch live
RBI Interest Rate Cuts: The Reserve Bank of India (RBI) is expected to cut interest rates for the first time in nearly five years
RBI Monetary Policy Meet 2025 Live Streaming: As the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) enters its second day on February 6, economists anticipate a 25 basis point (bps) rate cut, which would be the first such reduction in five years. The MPC is deliberating on key interest rates and measures to address domestic liquidity conditions and manage INR volatility.
This meeting is particularly significant as it is the first under the leadership of newly appointed RBI Governor, Sanjay Malhotra, who took charge in December as the 26th governor, replacing Shaktikanta Das.
Rate Cut Expectations
Many analysts expect the MPC to announce a 25 bps cut, with the last rate cut occurring in May 2020. Shreya Sodhani, Regional Economist at Barclays, stated, “We continue to expect the RBI MPC to announce a 25 bps policy repo rate cut in the February 7 policy meeting, along with non-rate measures to address liquidity issues and manage INR volatility.”
Suman Chowdhury, Executive Director & Chief Economist at Acuité Ratings, highlighted that this meeting occurs amid both external and domestic challenges. Global developments, such as changes in U.S. government policies and a stronger USD, have led to capital outflows and currency depreciation in developing economies like India. On the domestic front, India’s economic slowdown, with GDP growth projections down to 6.4% from 8.2% in FY24, is also a major concern.
Neutral Stance Expected to Continue
The government’s fiscal strategy in the Union Budget for 2025 has created room for potential rate cuts to stimulate growth. India’s GDP growth has slowed to a seven-quarter low of 5.4% in Q2 FY25, adding pressure on the RBI to support the economy. According to Bajaj Broking Research, the MPC is likely to maintain its neutral stance, offering flexibility in future policy decisions.
Edelweiss Mutual Fund predicts a total rate cut of 50 bps in the first half of 2025, as monetary policy is expected to complement fiscal measures to boost demand.
Inflation and Rupee Pressure
Inflation remains a critical factor in the RBI’s decision-making. Consumer Price Index (CPI) inflation for FY26 is expected to be 4%, with January inflation projected below 4.5%. December inflation stood at 5.22%, marking four consecutive months above 5%. Although food inflation eased to 8.4% in December, currency stability continues to be a concern.
The Indian rupee has been under pressure due to rising U.S. bond yields and global trade tensions. A rate cut could weaken the currency further, prompting the RBI to take a cautious approach.
Stock Market Strategy
Indian stock market investors are closely watching the RBI MPC decision, due to be announced on Friday. “Expectations are high for a potential rate cut following FM Nirmala Sitharaman’s focus on boosting consumption in the Union Budget 2025-26,” said Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd. The focus on urban consumption through income tax relief is seen as positive for equity markets.
Abhishek Pandya, Research Analyst at StoxBox, added, “This relief is expected to stimulate urban consumption, which has been sluggish. We will be paying close attention to Governor Malhotra’s comments on inflation projections and GDP forecasts, as any immediate rate easing could help support growth in FY26.”
Bond Market Strategy
Suresh Darak, Founder of Bondbazaar, expects a 25 bps rate cut, though he believes this move is largely priced in by the market. “The real focus will be on the RBI’s future guidance, particularly their strategy for managing liquidity amid currency depreciation,” Darak said.
Mayank Mundhra, VP of Risk & Head Research at Abans Group, noted that Indian government bond yields have been declining, with the 10-year bond yields hovering around 6.63%, near the repo rate of 6.5%. “Markets have already priced in rate cuts, and the RBI’s recent liquidity infusion efforts have capped yields,” Mundhra added. He cautioned that delays in rate cuts due to global volatility or inflation concerns could lead to negative market reactions.
In conclusion, the RBI’s upcoming guidance on liquidity and currency management will be crucial in shaping market sentiment across various asset classes.
RBI MPC 2025: How and When to Watch
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- MPC Meeting Dates: February 5–7, 2025
- Repo Rate Announcement: February 7, 2025 at 10:00 AM
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- RBI Governor’s Press Conference: February 7, 2025 at 12:00 PM
Governor Sanjay Malhotra will address the media following the rate announcement, providing insights into the RBI’s decision and sharing his perspectives on the Indian economy and the Union Budget 2025.
