New Delhi, June 2
The SBI report on Monday projected a mega 50-basis point rate cut in June’s RBI MPC policy, and a large rate cut could reinvigorate a credit cycle and act as a counterbalance to uncertainty.
The cumulative rate cut over the cycle could be 100 basis points, said Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.
“Domestic liquidity and financial stability concerns have receded. Inflation is expected to stay within the tolerance band. Keeping the domestic growth momentum intact should be the main policy focus and provide the justification for a jumbo rate cut,” he mentioned.
With liquidity in an extended surplus mode, liabilities are getting repriced faster in the current rate-easing cycle. Banks have already reduced interest rates on savings accounts to the floor rate of 2.70 per cent.
Also, fixed deposit (FDs) rates have been reduced in the range of 30-70 bps since February 2025. Transmission to deposit rates is expected to be strong in the coming quarters, said the SBI report.
India’s economy grew by 7.4 per cent in Q4 FY25 as against 8.4 per cent growth in the same quarter last fiscal. From the expenditure side, the GDP growth of 7.4 per cent in Q4 was supported by a strong uptick in the capital formation, which registered a 9.4 per cent YoY growth.