Brokerages expect more rate cuts after the Reserve Bank of India (RBI) lowered the repo rate by 25 basis points to 6.00% and shifted its policy stance from ‘neutral’ to ‘accommodative’.Bank of America Securities (BoFA) said the RBI is clearly moving into an easing cycle, having delivered two consecutive rate cuts along with significant liquidity support over the past three months.
The firm said this policy shift is intended to reduce concerns over the RBI’s monetary policy intent and ease economic anxiety.
The brokerage expects a total of 100 basis points of cuts in the current cycle.With 50 basis points already delivered, it sees the repo rate falling to 5.50% by the end of 2025.BOFA said this level aligns with the estimated neutral rate. It added that a move below 5.50% would require a sharp deterioration in growth, which appears unlikely at this stage.Macquarie called the policy stance dovish and now expects another 50 basis points cut in FY26. The shift in stance to accommodative came as a surprise, according to the firm.Macquarie noted that both inflation and GDP growth projections were revised down by 20 basis points.For banks, Macquarie warned of margin compression and potential earnings downgrades. If the total rate cuts reach 100 basis points, earnings per share (EPS) for its coverage universe could fall by 5–10% in FY26. Public sector banks are likely to face more pressure than private sector banks.
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