Repo rate cut from 1.25% to 1.50% possible, RBI can take a big decision if inflation decreases: SBI report

The Reserve Bank of India (RBI) can reduce interest rates aggressively due to continuously decreasing inflation. Along with this, the attitude of monetary policy can be softened by removing ‘neutral’ by March 2026. This information was given in the report of SBI Research released on Monday, May 5.

The report stated that if the inflation rate in the best case cinery is for three consecutive months, then by financial year 26, the repo rate can be deducted from 1.25 percent to 1.50 percent (REPO RATE CUT).

Inflation in March at minimum level of many years: report

SBI report said, “Inflation was at a minimum level of many years in March and is expected to be low in inflation.

Repo rate cut by up to 1%

The central bank began to cut the repo rate in February 2025, since then the RBI has reduced the interest rates by 0.50 percent. According to the report, “Bank deposit rates may be cut by up to one percent from existing levels in the coming time.”

Rupee stable under 85-87 against dollar by 2025

The domestic inflation rate is currently under the RBI target of 2-6 percent, while the average inflation rate is 4.7 percent based on the available data. SBI Research further said that it hoped that the rupee may remain stable within the range of 85-87 against the dollar by $ 2025.

The report said that the domestic effect of tariff on the dollar will appear in 2025, which will support the rupee. In addition, DXY is expected to decline, as the American domestic economy will adjust the tariff effect. “