The Reserve Bank of India's Monetary Policy Committee is expected to continue to cut the benchmark lending rate in June. The RBI will announce the decision on June 6.This is shortly after better than estimated GDP growth in the January-March quarter, even as India's retail inflation has slipped to its lowest in nearly six years.All 30 economists polled by Bloomberg expect the MPC to continue to cut rates for the third straight meeting. The benchmark lending rate, or the repo rate, is expected to come down by another 25 basis points to 5.75%.Notably, one basis point is one-hundredth of a percentage point."We believe the RBI MPC could likely deliver a third successive repo rate cut of 25 basis points on June 6 while retaining the stance as 'accommodative'," said Aastha Gudwani, chief India economist at Barclays. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}();GDP: Better Than Estimated The GDP growth rate rose to a four-quarter high of 7.4% in the January-March period, while GVA rose 6.8% during the fourth quarter. For the full year, GDP is estimated to have grown by 6.5%, which is the same as compared to the second advance estimate of 6.5%.However, the key driver of higher GDP growth was also the widening of net indirect taxes due to lower subsidies, which added 1.3 percentage points to headline growth, said Gudwani. Real GVA growth at 6.8% was also higher than estimate, explained by the upward revision of the Q3FY25 print, and better operating profit growth driving up manufacturing GVA, said Gudwani, who retained the growth forecast at 6.5% for FY26 as well. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}();Retail InflationIndia's retail inflation has slipped to its lowest since July 2019, moderating to 3.16% in April. Food and beverage inflation eased to 2.14% led by contracting vegetable inflation. CPI inflation for FY26 is projected at 4%, with Q1 inflation at 3.6%, by the RBI. The benign inflationary patterns suggest an aggressive rate cut trajectory by India’s central bank with key policy rate likely to breach the neutral rate by March 2026, though the transmission of rate cuts on deposits may not be even, said Soumya Kanti Ghosh, group chief economic advisor at the SBI. Barring any food price shocks, Ghosh expects cumulative rate cuts of about 125-150 basis points, with inflation expected to breach 3% consistently for next three months. Jumbo rate cuts of 50 basis points could be a better signalling mechanism than secular 25 basis points tranches spread over the horizon, he added. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}();Banking LiquidityThe Reserve Bank of India will pay Rs 2.69 lakh crore—the highest-ever surplus—as dividend to the central government for FY25. This compares with Rs 2.1 lakh crore in FY24. Economists had pegged the surplus transfer to the government in the range of Rs 2.5-3.5 lakh crore for the fiscal. The RBI dividend is a substantial durable liquidity infusion, the impact of which on system liquidity will be felt once government expenditure picks-up, said Gaura Sengupta, chief economist at IDFC First bank. System liquidity which is currently averaging at Rs 1.6 trillion or 0.7% of Net Demand and Time Liabilities (NDTL) in May 2025, could rise to Rs 5 trillion (2% of NDTL) by August-end, according to her estimates. While it might not spell the end of open market operations purchases by the RBI, it does push-out the need for OMO purchases towards the second half of FY26, she said, estimating incremental OMO purchases of Rs 1.6 trillion in the remainder of FY26. This will keep system liquidity surplus at 1% of NDTL by March 2026.!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}();. Read more on Economy & Finance by NDTV Profit.