RBI Likely To Cut Interest Rates Again On June 6: Poll
The Reserve Bank of India (RBI) is expected to reduce interest rates at its upcoming June 4–6 policy meeting, marking its third consecutive rate cut, according to a Reuters poll of economists conducted between May 19 and 28. The central bank is also likely to implement another cut in August, to boost a slowing economy and counter mounting global risks.
India’s economic growth decelerated sharply to 6.3 per cent in FY2024-25, down from over 9 per cent the previous year. With inflation running below the RBI’s 4 per cent target, the central bank has considerable room to ease monetary policy. This anticipated move aligns with a broader trend among global central banks, which are also considering policy loosening amid uncertainty triggered by US President Donald Trump’s ongoing trade tensions.
Out of 61 economists surveyed, 53 expect the RBI to lower the repo rate to 5.75 per cent in June. Two foresee a sharper 50-basis-point cut, while six anticipate no change. Looking further ahead, 47 of 58 economists in the same poll predict that the key rate will fall to 5.50 per cent by the end of August, reflecting a growing consensus compared to last month’s survey, where only just over half held that view.
The global risks we are facing in terms of trade tensions are downside risks to global growth and, hence, to India's growth," said Dhiraj Nim, economist at ANZ, who expects two more rate cuts after the June meeting. "If domestic inflation is not an issue, then these risks should also lead to a stronger counter-cyclical policy response from the RBI."
Aggressive Rate Cuts
There is a possibility that the central bank could reduce rates more aggressively than currently forecast if ongoing trade negotiations with the US fail to produce an agreement.
Even with the expected easing, a total rate cut of 100 basis points would mark the shortest and shallowest rate-cutting cycle by the RBI in over a decade.
In a separate Reuters poll, Indian equity markets are expected to remain resilient, with the benchmark indices projected to hit new highs by end-2025, despite concerns over high valuations. That optimism mirrors a relatively positive economic outlook, with GDP growth expected to average 6.3 per cent this fiscal year, rising to 6.5 per cent in FY2026.
However, challenges remain. Indranil Pan, chief economist at Yes Bank, noted that the February rate cut had limited impact on lending rates, largely due to tight liquidity conditions. While deposit rates have declined, Pan cautioned it’s unclear whether this reflects effective policy transmission or growing stress within the banking system.
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