RBI MPC Meeting April 2025: Key Expectations

RBI MPC Meeting April 2025 to review interest rates as inflation cools and economic indicators like GDP and PMI show positive momentum.

The Reserve Bank of India (RBI) is going to declare its first monetary policy for the financial year 2025-2026 in a few days. The meeting will start on the 7th of April 2025 and will continue for three days of discussion. The monetary policy decision will be announced on 9th April 2025. Mr. Sanjay Malhotra will be heading the meeting. Further in this blog, let us look at what to expect from RBI MPC meeting April 2025.

What is RBI Monetary Policy

RBI Monetary Policy is a strategy implemented by the central bank to control the flow of money, interest rates, and inflation in the nation. It helps the economy by keeping prices within limits and ensuring that funds are sufficiently available for all citizens and businesses in the country.

The RBI does this by adjusting the rates, such as the repo rate, which is the rate at which banks borrow from RBI, and the reverse repo rate, which determines the rate at which banks deposit money with RBI.

If inflation is high, the RBI raises interest rates so that spending declines, and if the economy is slowing down, the RBI will lower interest rates to increase borrowing. The meeting takes place every two months to reassess and implement changes to these policies based on economic conditions. Further this year, the RBI MPC meeting is scheduled on the following dates:

Meeting Number	Meeting Dates
1st Meeting	April 7 to 9, 2025
2nd Meeting	June 4 to 6, 2025
3rd Meeting	September 29 to October 1, 2025
4th Meeting	December 3 to 5, 2025
5th Meeting	February 4 to 6, 2026

RBI MPC

What was the Outcome of the Previous RBI Meeting

During the previous RBI MPC meeting which was held on 5 to 7 February 2025, the repo rate was 6.5%, which was reduced by 25 basis points, bringing it to a final rate of 6.25%. Further, the Standing Deposit Facility (SDF), Marginal Standing Facility (MSF), and Bank Rate were reduced to 6%, 6.5%, and 6.5%, respectively. Further, the forecast for GDP and CPI inflation are as follows:

Particulars	GDP Growth Forecast	CPI Inflation Forecast
FY26	6.70%	4.20%
Q1FY26	6.70%	4.50%
Q2FY26	7.00%	4.00%
Q3FY26	6.50%	3.80%
Q4FY26	6.50%	4.20%

Rate Cuts

What is the Impact of RBI MPC

Now let us now understand how RBI MPC meeting affects home loan rates and its impact on bond yields and currency:

1. Bond Yields:

When the RBI cuts the repo rate, bond yields will also fall. This happens because when a rate cut happens, existing bonds with more interest rates get further attractive. Due to this, bond prices rise. However, bond price and bond yield are inverse in nature, so bond yield will decline.

For example, if we look at the previous RBI meeting, where a 25-basis-point rate cut was implemented, bond yields declined. In February 2025, the yield was 6.7%, but it has now reduced to 6.4% in April 2025. We can see in the below-mentioned picture, the bond yields fell after the RBI MPC meeting in February 2025.

Source: Tradingview

2. Currency

When the RBI cuts the rate, the returns on Indian financial assets fall. Because of this, many foreign investors pull their funds out as they find opportunities to invest elsewhere. This lowers the value of the rupee. Therefore, the rate cut will lead to the rupee depreciating.

For example, in the last meeting, when the rate cut was announced, the rupee was 87.26 on 7 February 2025 and went up to 87.98 in the same month. So, this reflects the impact on the currency, causing the rupee to depreciate. In the below-mentioned picture, we can see the impact.

Source: Tradingview

3. Home Loans

When the RBI cuts the repo rate, banks get funds at a lesser cost and they pass on this benefit by making a reduction in home loan interest rates. Due to this, there is a drop in EMI, which makes home loans cheaper for both existing and new borrowers. Most home loans today are linked to the repo rate, so changes reflect quickly.

For example, after the rate cut in February 2025, banks like SBI and HDFC lowered home loan rates by 25 basis points. This reduced EMIs for many borrowers, making home loans more affordable.

What are the Expectations for the Current RBI MPC Meeting

During the current RBI meeting, a rate cut of 25 basis points can be expected, reducing it from 6.25% to 6%. This expectation is grounded in the central bank’s ongoing efforts to stimulate economic growth amid moderating inflation. Further, let us try to figure out the reasons behind this rate cut expectation:

• Inflation Controlled: Indian retail inflation has finally cooled off, as reported at 3.61% in February 2025 . This number is the lowest in the past seven months. So, this can be a strong reason that may urge the central bank to reduce interest rates.
• Healthy GDP Growth: The GDP growth numbers of India have also been projected at 6.4% in FY25. Further, for the next financial year, FY26, it is projected at 6.5%. With this strong growth, a cut can be expected in the rates since everything is going well.
• Robust PMI Numbers: The Purchasing Manufacturing Index (PMI) for the month was reported at a significant number of 58.1 . This figure is an 8-month high. This trend was because new orders and output increased, which led to higher buying activity.
• Banking Liquidity: The central bank has been very clever this time in managing liquidity. It injected approximately 717 billion rupees into the banking system during December and March to alleviate cash deficits.

Risk and Concerns

On the uncertainty part, there may be a risk of U.S. tariffs, which have been a global issue in recent times. America has imposed a 26% reciprocal tariff on India, which may be concerning for major sectors that export more to America. Further, we need to see how India will respond and how this issue will be settled. This is a point that may impact the RBI’s monetary meeting.

Conclusion

The upcoming RBI Monetary Policy Committee rate decision will be closely watched by investors. Overall, with all the economic things being stable in India, a rate cut of 25 basis points can be expected next week. With the inflation and GDP numbers being good, however, there is a risk of a global trade war and tariffs. So, next week could be worth seeing, and there will be volatility in the markets depending upon the outcome of monetary policy committee decisions. Investors need to be cautious and make investment decisions wisely. To track their investments in equity or mutual funds, they can use various online platforms, which will help them make better investment decisions.