HDFC Bank described the RBI’s announcement as a “surprise monetary bonanza,” noting that the frontloading of a 50 basis point rate cut along with a 100 bps reduction in the CRR reflects the central bank’s resolve to spur aggregate demand amid global headwinds.
The bank pointed out that while the RBI kept its growth forecast unchanged at 6.5 percent, it reduced its inflation forecast to 3.7 percent for the year. “Today’s decision should help accelerate the decline in borrowing costs for households and support credit demand in the economy,” HDFC Bank observed. However, it added that the change in stance from accommodative to neutral suggests the RBI may pause further action for the foreseeable future.
The central bank is now expected to turn data-dependent, and any additional cuts could come only if growth weakens materially. “We are unlikely to see further repo rate cuts in 2025,” the bank concluded.
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