The Reserve Bank of India’s recent 50 basis point repo rate cut and a surprise 100 basis point cash reserve ratio (CRR) cut mark a bold push to boost growth, but we may not be at the end of the easing cycle yet.According to Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, while this could be the terminal rate, there is still a “small possibility of another cut,” especially if growth weakens or inflation stays low. “We are possibly towards the end of the rate cut cycle, but we are not yet there,” he said.
Ghosh believes the CRR cut, effective from September, is timed carefully to align with the start of the busy credit season. This could create additional lending capacity of ₹2.5 lakh crore and push overall credit growth to around 13%, led by retail demand.
He expects the liquidity infusion to support both credit growth and overall economic activity without creating asset price bubbles. “In India, the link between asset price inflation and monetary policy is not that strong,” he said.On the investment side, he expects public capex to remain weak in the early months but pick up later in the year, mirroring last year’s trend of a back-ended push. States are also likely to take the lead in infrastructure spending.Also Read: RBI move lifts growth hopes; Manulife Investment bets on these sectorsWhile the RBI has kept its growth forecast at 6.5%, Ghosh sees this as achievable and possibly even conservative, depending on monsoons and global developments. “We have to be cautiously optimistic,” he said, adding that his estimate stands at 6.3% for now.He also pointed to a rising money multiplier—thanks to lower currency leakage and growing digitisation—which could help maintain healthy money supply growth even as reserve money expansion slows.Also Read: Bernstein bullish on private banks, gold lenders after RBI’s surprise easingFor the entire interview, watch the accompanying videoCatch all the latest updates from the stock market hereFirst Published: Jun 10, 2025 12:21 PM IST
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