Economists Predict Lower Inflation and Interest Rates Ahead, Favoring Repo Rate Cuts
Economists suggest that if the Reserve Bank of India (RBI) lowers the repo rate to between 5 and 5.25 percent, the real interest rate for the current financial year would fall to around 1.25-1.5 percent—an ideal range to boost economic growth. Following April’s consumer price index (CPI) inflation hitting a 68-month low at 3.16 percent, experts have revised their FY26 inflation forecast downward, now expecting it to average below 4 percent. A recent Moneycontrol poll indicates most economists support cutting the repo rate by at least 50 basis points this year to sustain economic momentum. The median forecast from 15 economists projects CPI inflation at 3.8 percent for FY26. A 50-basis-point rate cut would reduce the repo rate from the current 6 percent to 5.5 percent. The RBI’s Monetary Policy Committee (MPC) will next meet from June 4-6 to review policy. Economists attribute the easing inflation to a steeper-than-expected decline in food prices and reduced trade uncertainties,...