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The Organization for Economic Co-operation and Development (OECD), in its latest economic outlook stated that the policy interest rate in India has declined from 6.5% in January to 5.5% in September 2025, with average lending rates on fresh and outstanding loans falling by about 0.6 percentage points. Bank credit growth has been sustained by easing financial conditions and stronger bank balance sheets. With inflation below the central banks 4% inflation target, the central bank has room to extend the easing cycle. If inflation remains within the target range and inflation expectations remain well anchored, the policy rate could gradually decline toward 5% by fiscal year 202627, OECD noted.
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