MC-Deloitte CEO Survey: Majority of India Inc expects RBI to cut rates by 25-50 bps in next 6 months

The central bank has held the repo rate steady since April 2023.

The majority of Indian industry expects the Reserve Bank of India (RBI) to deliver a 25-50 basis points cut in the benchmark repo rate in the next six months, according to a Moneycontrol-Deloitte Survey covering 44 responses from chief executive officers (CEOs).

While 25 percent of the CEOs surveyed expected a rate cut between 25-50 basis points in the next six months, 22.7 percent see the RBI maintaining status quo.

The exclusive Moneycontrol-Deloitte CEO survey was conducted between January 10 and January 22 across financial services, consumer goods, technology, and energy sectors.

18.2 percent of the CEOs surveyed expect a rate cut of atleast 25 basis points during the next six months, whereas a smaller 15.9 percent see a hike of 25-50 basis points.

The Reserve Bank of India held the repo rate steady at 6.5 percent for the 11th consecutive time in its December monetary policy after increasing it by 250 basis points from May 2022 to February 2023.

The central bank has held the repo rate steady since April 2023.

The central bank's monetary policy committee (MPC) kept the policy rate unchanged at 6.5 percent by a 4:2 decision, amid higher food inflation.

Economists expect the RBI to cut the repo rate in 2025 after holding it at 6.50 percent for more than one and a half years amid easing inflation.

Given that the MPC will have better clarity on the Consumer Price Index (CPI) Inflation by the February policy, economists see the chance of a rate cut next month under the recently-appointed Governor Sanjay Malhotra.

Expectations of a rate cut intensified after India’s GDP growth slumped to its lowest level in seven quarters at 5.4 percent in the second quarter of FY25, as mining growth contracted to an eight quarter low and manufacturing and utility services took a hit.

Last year, Union Ministers Nirmala Sitharaman and Piyush Goyal called for more affordable bank lending rates, highlighting concerns around higher cost of borrowing.