RBI focus to shift from inflation to India's growth: Care Ratings

The growth rate in Q3 FY25 was 6.2 per cent—up from 5.6 per cent in Q2 FY25.

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, the domestic rating agency noted.

The upcoming monetary policy meeting of the Reserve Bank of India (RBI) in April will take place amid a significant moderation in headline inflation over recent months, it said.

Hence, Care Ratings expects the RBI monetary policy committee’s focus to shift from concerns about inflation to supporting growth.

As a result, the MPC is likely to continue the rate-cutting cycle that began in February, with another 25-basis-point reduction in the repo rate during the April meeting, while maintaining a neutral stance amidst global headwinds, it noted.

Furthermore, the policy statement is expected to prioritise liquidity management, as liquidity conditions have remained tight despite several measures implemented by the RBI to support liquidity.

Care Ratings expects the policy statement to have a dovish undertone, even while remaining cautious about global developments.

ALCHEMPro News Desk (DS)