It’s a defensive response to a fundamentally changing global trade landscape, say experts
MUMBAI, Apr 9 (The CONNECT) -The Monetary Policy Committee (MPC) unanimously decided to lower the repo rate by 25 basis points, bringing it to 6.00%. This is the second consecutive reduction, following a similar move in February 2025.
The central bank shifted its monetary policy stance from ‘neutral’ to ‘accommodative,’ indicating openness to further easing to support economic revival.
Viram Shah, Founder & CEO, Vested Finance, said this isn’t just another adjustment in the monetary policy cycle—it’s a defensive response to a fundamentally changing global trade landscape.
“By slashing growth forecasts from 6.7% to 6.5% and shifting to an “accommodative” stance, the RBI is acknowledging that Trump’s tariffs represent a structural threat to India’s growth model,” he said. “We believe cumulative rate cuts could reach 100 basis points reflecting that trade tensions will persist rather than resolve quickly,” he said.
For investors, this suggests a market environment where defensive positioning may outperform growth-oriented strategies despite monetary easing.
India remains the fastest-growing major economy, but the dramatic deceleration from 9.2% to 6.5% in just one year underscores the vulnerability of even the strongest economies to protectionist policies, Shah said. As global recession probabilities climb to 60%, the RBI’s preemptive action may prove crucial in maintaining India’s relative economic outperformance, he said.
Bajaj Broking said the RBI cited several critical factors for its latest policy direction.
The introduction of new U.S. tariffs, including a steep 104% duty on Chinese imports, has exacerbated global trade tensions, impacting economies dependent on exports, including India.
India’s economic activity has shown signs of slowing, prompting the need for policy measures that can stimulate demand and reinvigorate investment.
The GDP growth estimate for FY2025-26 has been revised downward from 6.7% to 6.5%, citing potential external risks and internal economic moderation.
The Consumer Price Index (CPI) inflation is now projected at 4% for FY26, down from the earlier estimate of 4.2%, largely due to a faster-than-anticipated fall in food prices.
The cut in the repo rate is expected to translate into lower interest rates across lending segments, including housing, personal, and vehicle loans. This is likely to support both consumer spending and private sector investments.
Market reactions were cautiously optimistic. While equity indices saw some volatility, the broader sentiment reflected confidence in the central bank’s supportive measures, Bajaj Broking said.
With these strategic policy moves, the RBI aims to cushion the impact of global economic volatility while addressing domestic slowdown concerns. The combination of rate cuts, a supportive policy stance, and forward-looking regulations is intended to bolster financial stability, catalyze credit flow, and pave the way for stronger and more resilient economic growth, it said.
Meanwhile, the real estate industry expects that the back-to-back easing of the key policy rate will bring cheer to the real estate sector, particularly the residential segment. For aspiring homeowners—especially first-time buyers—this move enhances affordability, provided lending institutions transmit the benefit of the rate cut through lower interest rates on home loans.
Developers, too, stand to gain. With funding remaining a concern, especially for under-construction projects, a dip in borrowing costs can ease liquidity pressures and accelerate project deliveries.
While the sector cautiously welcomes the RBI’s latest move, experts reiterate that the transmission of benefits and continued policy support will be key to sustained revival.
Prashant Sharma, President, NAREDCO Maharashtra,said:
“The RBI’s decision to reduce the repo rate by 25 basis points to 6% comes as a welcome and timely move for the Indian economy. At a time when global headwinds and tariff concerns loom large, the accommodative stance by the MPC will serve as a much-needed catalyst to revive consumption and investment cycles. For the real estate sector, this signals increased affordability for homebuyers and improved liquidity conditions for developers. It will directly impact housing demand, particularly in the affordable and mid-income segments, and will boost sentiments in the real estate sector. This policy stance will further encourage transparency and trust, essential for sustainable sectoral growth.”
Nishant Deshmukh, Founder and Managing Partner, Sugee Group:
“The recent repo rate cut by the RBI signals a proactive stance to stimulate growth and investment, particularly in the real estate sector. Reduced lending rates are expected to enhance home affordability, encouraging aspiring buyers to take that crucial step towards homeownership. For developers, improved access to capital will aid project execution and timely delivery. However, the real impact of this move will hinge on how swiftly and effectively commercial banks pass on the benefits to end consumers.”
Samyak Jain, Director, Siddha Group, said:
The RBI’s policy move is a strong signal of its commitment to support growth while leveraging the benign inflationary backdrop. It comes at an opportune moment, especially as we look to maintain the momentum in home sales post Gudi Padwa. For the real estate sector, a reduction in interest rates enhances affordability, which is the cornerstone of sales revival. Especially in metro cities like Mumbai, this policy stance will help attract fence-sitters and first-time buyers. Lower interest rates will not only encourage new buyers but also aid existing homeowners in managing EMIs better.”
“A rate cut in a controlled inflation environment is a strategic push towards economic revival, said Shraddha Kedia-Agarwal, Director, Transcon Developers. Lower interest rates make home loans more attractive and affordable, especially in metros like Mumbai where ticket sizes are higher. This move will act as a catalyst to improve buyer sentiment, accelerate decision-making, and will go a long way in supporting the real estate sector’s momentum, particularly for end-user driven and premium housing segments. It also reaffirms the RBI’s supportive approach towards economic revival through a healthy credit ecosystem.”
The increasing global turmoil and its spillovers to the Indian growth slowdown will necessitate the MPC for deeper rate cuts, said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank. We see scope for additional 75-100bp of rate cuts in the year ahead depending on the scale of global slowdown.”
Anuj Puri, Chairman – ANAROCK Group, said home loan borrowers may not see much meaningful or immediate interest rate relief. Banks have not transmitted earlier MPC rate cuts to borrowers because of higher funding costs, pressure on net interest margins, higher NPAs, and a cautious lending climate.
It will be a boost to homebuyers, particularly for those eyeing affordable housing, If banks do pass on the benefits of the last two rates cuts, Puri said.
Many first-time homebuyers who had been hesitating to take the plunge may make their move if home loan rates reduce, he said.
Housing prices have risen across the top 7 cities in the last one year. As per ANAROCK Research, Q1 2025 saw average housing prices rise by anywhere between 10-34% in the top 7 cities, with NCR and Bengaluru recording the highest 34% and 20% jump, respectively. The average prices in top 7 cities collectively stood at approx. INR 7,550 per sq. ft. in Q1 2024-end, while in Q1 2025-end it increased to approx. INR 8,835 per sq. ft. – a collective increase of 17% annually.
Home loan borrowers whose lenders don’t pass on the rate cut could consider negotiating a lower rate or a balance transfer. They should keep their expectations realistic as there may be only partial relief, if any. Any potential EMI reduction should be used to prepay home loans or invest for higher returns instead of on mere consumption, Puri explained.
Vishal Goenka, Co-Founder of IndiaBonds.com, felt that the RBI has moved to accommodative stance. US Fed governor last week mentioned the global tariff disruption as possibly inflationary for developed markets.
With growth and inflation expectations cut to 6.5% and 4% respectively for FY26, India is expected to grow in a lower inflation environment. The policy is balanced given domestic factors and is pro-growth now. Anticipate a long pause from hereon as future action on rates would depend on global factors again or any exogenous shocks to world economy, Goenka said.
FPI debt investments have seen net outflows of 7,174cr in this financial year itself with about 10k cr outflows just yesterday on back of global markets meltdown, said quoting NSDL.
Shrinivas Rao, FRICS, CEO, Vestian, said the reduction in the repo rate is expected to catalyse domestic consumption, boosting GDP growth. Moreover, the change in stance from ‘Neutral to Accommodative’ points towards easy monetary policy and future rate cuts, leading to a reduction in mortgage rates and a boost to the real estate demand.
Vimal Nadar, Head of Research at Colliers India, opined that the change in RBI’s stance from neutral to accommodative is indicative of a growth supportive monetary policy and this becomes more critical in the backdrop of heightened uncertainty in global markets following the levy of reciprocals tariffs by the US.
The Consecutive reduction in benchmark lending rates will boost homebuyers’ sentiments and resultantly improve housing demand particularly in affordable and middle-income segments. Real estate developers across segments also stand to benefit from likely lowering of financing costs, he said.
Overall demand and real estate growth is likely to be on the upswing, given the anticipation of further easing in monetary policy. However, global headwinds and trade frictions will remain a key monitorable for all economic sectors including real estate.
RBI has also proposed securitization of stressed assets through a market-based mechanism, in addition to the Asset Restructuring Company (ARC) route. Reduction in borrowing costs coupled with alternate resolution mechanism for stressed assets is likely to benefit real estate stakeholders in the near-mid-term. This is expected to provide significant relief to cash strapped developers and several stalled projects due to financial constraints, Nadar said.
Amit Goyal, MD, India Sotheby’s International Realty, said the RBI decision will bolster corporate confidence and investments. For India’s housing sector, if the rate cut is passed on as a benefit on home loans, it will support the demand momentum, and help the real estate industry ride over this period of uncertainty.
Piyush Bothra, Co-Founder and CFO, Square Yards, said the RBI move is a timely and encouraging move for the real estate sector. For end-users, the lower rate translates to more affordable EMIs, making home ownership more achievable at a time when property values are inching upward. Moreover, this further strengthens liquidity in the system, enabling developers to secure funding and accelerate new project rollouts.
As inflation remains under control, this rate cut could serve as a stabilizing force amid broader global uncertainties, reinforcing stakeholder confidence in residential real estate, Bothra said.
Amit Prakash Singh, Co-Founder & Chief Business Officer, Urban Money, said the repo rate cut move will boost credit demand, improve affordability, and enhance liquidity across the lending ecosystem.
Mahendra Kumar Jajoo, CIO – Fixed Income, Mirae Asset Investment Managers (India) Pvt. Ltd, the RBI clears the runway for continued positive momentum in fixed income markets. While the risk of a global disruption remains in view of the ongoing developments on tariffs, the guidance is for further cuts in forthcoming policies.
Bond yields remained slightly higher immediately after policy announcement as the rates have eased significantly in the prelude but are expected to continue to soften going forward, Jajoo said.
Ashish Bhutani, CEO, Bhutani Infra, said ,the real estate industry is pleased with the Reserve Bank of India’s decision.
Reduced borrowing costs for developers will also help projects run more smoothly and may even speed up new construction projects, which would help close the current housing market demand-supply gap. Non-Resident Indians (NRIs) and the larger investor community may also change their investment portfolios as a result of the United States imposing a 26% tax on Indian goods.
NRIs may be prompted by such tariffs to reevaluate their investment portfolios and possibly look into opportunities in India. NRI investments have already significantly increased in the luxury and commercial segments of the Indian real estate market.
Although it is yet too early to tell how U.S. tariffs would directly affect NRI investment in Indian real estate, trade policies of this kind may encourage more NRIs to put money into the Indian real estate market in search of steady and possibly profitable returns.
Kishore Lodha, CFO, UGRO Capital, said the change in stance to “accommodative” is consistent with this trend. The rate cut is a welcome move that will help ease the high-interest-rate regime we have experienced over the past three years, although the transmission of this rate cut needs to be monitored, as banks are under pressure while passing on the benefits to all customer segments due to higher borrowing and operational costs.
Making co-lending arrangements applicable to all regulated entities, rather than limiting them to PSL loans, will significantly boost volumes in co-lending, Lodha said.
Deepak Ramaraju, Senior Fund Manager, Shriram AMC, welcomed the RBI announcement and said, this signals the central bank’s proactive approach to support growth and liquidity in the economy, especially in light of potential headwinds such as escalating trade tensions and counter tariffs.
The reduction in borrowing costs along with tax cuts announced in budget is expected to boost consumption demand, especially in interest-rate sensitive segments, he said.
This can also support discretionary spending, which could aid sectors like auto, consumer durables, and housing and in turn help India’s relative economic outperformance versus global peers, given the backdrop of a slowing global economy, Ramaraju said.
The market sentiment was, however, dented by the RBI’s mention of revised gold loan guidelines, which has triggered uncertainty, he said. NBFCs and banks with a strong gold loan portfolio witnessed sharp corrections.
The “risk-off” mood among investors, driven by regulatory overhang, contributed to the sell-off. The fact that the guidelines are open for comments and review adds a layer of unpredictability to earnings visibility for these companies, he said.
While the policy stance is supportive of growth and liquidity, sector-specific regulatory risks—especially in the gold loan segment—are creating near-term volatility, he added
Siddarth Bhamre, Head of Research at Asit C Mehta Investment Interrmediates, said if inflation remains under/around 4% for FY26 then the real rate at 200 bps is on the higher side and mostly will be reduced by cutting interest rates further.
However. RBI would want to keep its arsenal intact if there is any disruption in the world order due to a tariff war, he said. “We believe RBI will watchfully go for couple of more cuts in little over as many policy meets,” he said. The 10 year bond yield may not show immediate correction but this policy has defined the near-term ceiling for it.
Vijay Kuppa, CEO, InCred Money, expected further rate cuts if inflation remains in control and growth continues to be a concern.
The next few months are going to be full of geopolitical turmoil with the Trump administration levying tariffs and creating an upheaval of the current trade arrangements. This would make it difficult for businesses to plan their investments and this uncertainty itself would be an impediment to growth, he said.
For investors, I would suggest they reassess their asset allocation and be diversified across asset classes. Having sufficient allocation to Cash & Debt will help to combat this medium-term volatility and also take opportunity to invest when attractive opportunities emerge.
K V Srinivasan, Executive Director and CEO, Profectus Capital Private Limited, with much greater competition and global uncertainties, investment in up-to-date machinery is critical to maintaining our competitive edge. The cost of debt has been high in the past couple of years, and the signal towards a benign rate scenario should encourage MSMEs to plan capital investment, he said.
Akshat Khetan, Founder, AU Corporate Advisory and Legal Services, said the RBI’s policy intervention was not just timely it was strategic. With inflation well under control at 3.61% in February 2025, and the global economy facing uncertainty, the central bank had ample headroom to stimulate growth and it did so.
The repo rate cut, effectively lowering the cost of borrowing for banks, businesses and consumers, sends a clear signal India is not stepping back. Instead, it is stepping forward. Lower interest rates on home loans, business credit and vehicle financing will put more disposable income in the hands of consumers and encourage private sector investments, Khetan said.
The rate cut aligns perfectly with the government’s vision to drive growth-led recovery, ensuring liquidity flows to sectors that need it most. Be it MSMEs, real estate or startups, cheaper credit will invigorate entrepreneurship and consumer demand. As businesses feel the pinch of U.S. tariffs, lower borrowing costs could provide the much-needed cushion to maintain momentum, he added.
