Goldman Sachs said on Wednesday that the Reserve Bank of India (RBI) will likely lower the repo rate by 25 basis points (bps) in its next announcement of the monetary policy meeting (MPC).

The multinational financial company thinks that growing global uncertainties need the reduction.

The future is still unclear, and policymakers will need to carefully manage a number of economic concerns, according to Santanu Sengupta, the Goldman Sachs economist for India.

In a media report, he said that while tariff adjustments and changes in the global economy may cause a little increase in inflation, India is probably not going to be as impacted as other nations.

Being the first meeting of the RBI’s Monetary Policy Committee (MPC) after Sanjay Malhotra became governor, this meeting is significant.

The three external MPC members, Ram Singh, Saugata Bhattacharya, and Nagesh Kumar, are also attending their second meeting.

Rajeshwar Rao has also been reassigned to the department of monetary policy.

While the RBI has made significant changes to its currency policy, the government has kept its budgetary flexibility for further actions. “In a period of economic slowdown, this move will enable the central bank to shift towards an easing stance,” he said.

Sengupta claims that the current decline in the value of the rupee is a long-overdue correction that ought to have happened sooner. “It’s a necessary macroeconomic correction,” he said.

“Through open market operations, the RBI is expanding its balance sheet, which will increase reserve money growth and help the economy in the latter half of the year,” said Sengupta.

Monetary easing would be essential to maintaining India’s economic momentum, he said.

Prior to the February 7 meeting of the monetary policy committee, SBI analysts anticipated that the RBI would announce a 0.25 percent rate drop.

According to the SBI Research research, the RBI has flexibility for rate decreases, at least in the near term, as the fiscal stimulus of Budget 2025–2026 is implemented.