India Ratings and Research (Ind-Ra) expects the Reserve Bank of India's (RBI) Monetary Policy Committee to reduce the benchmark interest rate by 25 basis points (bps) in its upcoming policy review meeting next month to support economic growth.
According to Devendra Kumar Pant, Chief Economist and Head of Public Finance at Ind-Ra, headline inflation is projected to ease to 4.7% in FY25, leading to a limited monetary easing of 75 bps in FY26.
However, Ind-Ra noted that if the impact of US reciprocal tariffs is greater than anticipated, the RBI may implement more significant rate cuts.