 "RBI, Reserve Bank of India")
During its June meeting, the monetary policy committee (MPC) surprised with an outsized 50 basis points repo rate cut, a large CRR reduction, and a pivot back to “neutral” stance from “accommodative”. After such a large and multi-pronged monetary easing, the likelihood of further rate cut soon appeared slim. However, more recent geopolitical developments and evolving growth-inflation dynamics seem to have enhanced the probability of more easing in the near future.
Since June, retail inflation sprang fresh downside surprises to reach a six-year low of 2.1 per cent y/y. Average CPI inflation in 2025-26 will likely undershoot the RBI’s downwardly
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