RBI’s Second Consecutive Rate Cut Is Timely And Encouraging, Says Industry Experts
The Reserve Bank of India (RBI) Governor, Sanjay Malhotra, announced a 25 basis point reduction in the policy repo rate, bringing it down from 6.25 per cent to 6 per cent, alongside a shift in the monetary policy stance from "neutral" to "accommodative" to support economic growth.
Governor Malhotra stated on Wednesday that the decision to lower the repo rate was unanimously approved by the Monetary Policy Committee (MPC), based on a thorough evaluation of current macroeconomic and financial conditions and outlook. He further explained that the MPC’s shift to an accommodative stance will allow for continued policy easing, including additional liquidity injections, to stimulate economic activity.
Experts have hailed the RBI’s decision to further lower the interest rates. BankBazaar CEO Adhil Shetty believes that this rate cut was in line with market expectations, and investors responded with cautious optimism.
Equity Market
“The Reserve Bank of India’s decision to cut the repo rate by 25 basis points to 6 per cent on 9th April 2025 has been largely welcomed by the equity markets. Lower interest rates generally support equity valuations as borrowing costs for companies decline, improving profitability and potentially boosting investment activity. Sectors such as banking, real estate, auto, and consumer durables often benefit the most from rate cuts due to increased credit demand and improved consumer sentiment,” Shetty noted.
“For equity investors, the market remains volatile for now owing to US tariffs and other economic situations; however, the rate cut signals a continued accommodative stance by the RBI aimed at supporting growth, which could bode well for medium-term market performance. Long-term investors may consider increasing exposure to interest rate-sensitive sectors, while also maintaining a diversified portfolio to manage risks from global volatility and sectoral imbalances,” he added.
Real Estate Market
Speaking about the real estate market, Piyush Bothra, Co-Founder and CFO, Square Yards, opined, “The RBI’s second consecutive repo rate cut is a timely and encouraging move for the real estate sector. For end-users, the lower rate translates to more affordable EMIs, making home ownership more achievable at a time when property values are inching upward. Moreover, this further strengthens liquidity in the system, enabling developers to secure funding and accelerate new project rollouts. As inflation remains under control, this rate cut could serve as a stabilizing force amid broader global uncertainties, reinforcing stakeholder confidence in residential real estate.”
Also Read: RBI MPC Highlights: From Repo Rate Cut To CPI Inflation Projection; Check Details Here
Suggestion To Investors
Advising investors, Murthy Nagarajan, Head-Fixed Income, Tata Asset Management, said, "RBI made it clear they will provide liquidity in the banking system to support growth. Investors may consider investing in duration products to take advantage of fall in yields in the coming months. Gilt fund, corporate bonds and short-term bond fund may be part of core portfolio to take advantage of fall in yields. For accruals, investors may look to invest in money market and ultra short-term bond fund.
Amit Modi, Director, County Group, said, “Indeed, the 25 bps reduction in the repo rate is good news. However, the change in the RBI’s stance from neutral to accommodative, which has resulted in over $80 billion liquidity infusion plus a first five-year rate cut in February, is even better news. Add to it the easing inflationary concerns and lowering of oil prices. In its entirety, the move will bolster consumption, boost growth, and benefit the real estate sector. Further, given this backdrop, we look forward to a further decrease in the repo rate in the next MPC meeting.”
This is the second time that the RBI has reduced key interest rates this year. In the February MPC meeting, the central bank decided to slash the repo rate by 25 basis points to 6.25 per cent.
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