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![0.25% rate cut more likely: SBI 0.25% rate cut more likely: SBI](https://assets.thehansindia.com/h-upload/2025/02/05/1520436-sbi.webp)
SBI economists expect the RBI to announce a 0.25 per cent rate cut in the monetary policy committee meeting on February 7.
New Delhi: SBI economists expect the RBI to announce a 0.25 per cent rate cut in the monetary policy committee meeting on February 7. As the fiscal stimulus of Budget 2025-26 plays out, the RBI at least in the short run has room for rate cuts, according to an SBI Research report released on Tuesday.
The report also states that going ahead a cumulative rate cut over the cycle could be at least 0.75 per cent, with two successive rate cuts over February and April 2025.With an intervening gap in June 2025, the second round of rate cuts could start from October 2025, it added.
The current pause by the US Federal Reserve gives some time for RBI to ascertain inflationary expectations have been fully anchored, the report said.
The report highlighted that monetary and fiscal coordination will require a delicate hand-holding as the Government navigates on the Fiscal Responsibility and Budget Management (FRBM) path.
According to the report the RBI Liquidity Framework needs to be revisited as a tight liquidity situation can adversely impact the flow of credit in the economy. The average liquidity deficit from December 16, 2024, stands at Rs1.96 lakh crore as of Jan 31, 2025, while the average Government of India cash balance of the same period came at Rs2.1 lakh crore.
“Based on the RBIs recent liquidity injections, we are estimating the durable liquidity at the end of the financial year may come around Rs0.6 lakh crore and system liquidity may be around Rs1 lakh crore surplus,” the report said.
It also highlighted that the global economy continues to exhibit resilience and is expected to grow 3.2-3.3 per cent by 2025. The global inflation has continued to soften and is expected to approach inflation targets for most of the central banks albeit with different speeds across geographies.
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