Goldman Sachs forecasts shallow RBI rate cut starting March 2025, lowers India's FY25 growth outlook to 6.4%

US investment bank Goldman Sachs has forecast that the Reserve Bank may go for only a shallow rate cut starting the March 2025 quarter and cumulatively cut rates by 50 bps by June. The investment bank has also scaled down India's growth forecast to 6.4 percent for FY'25 from 6.5% earlier.

“We pushed back our forecast for the start of rate easing by the RBI to Q1CY25 but continue to expect only 50bp cumulative cuts by mid-year” said Santanu Sengupta, chief India economist at Goldman Sachs and his team.

With the inflation print for September and October breaching the 4 percent target mandated by the government, economists have factored a delay in easing of the rate cycle by the central bank. The central bank has kept the policy rates untouched at 6.6 percent for more than ten meetings of the monetary policy committee. “While the cyclical growth slowdown calls for easier monetary conditions in our view, the “stronger dollar” scenario will mean the RBI will likely proceed cautiously. Given macro-prudential tightness, retail loan growth may remain tepid even in the face of lower rates” the report said.


The Investment Bank has also scaled down India’s growth forecast for FY’25 by 10 basis points to 6.4 percent and to 6.3 percent for calendar year 2025. “ Though India’s strong long-term structural growth story remains intact, we forecast GDP growth to decelerate to 6.3% year-on-year in CY25, on continued fiscal consolidation and slower credit growth on macro-prudential tightening by the RBI”.