Cooling retail inflation may allow RBI to front-load rate cuts, say economists

Last week, the central bank’s monetary policy committee reduced the repo rate by 25 basis points, the second such cut in a row, on benign inflation outlook and moderate growth The sharp drop in retail inflation in recent months will give the Reserve Bank of India (RBI) enough room to support growth amid rising global uncertainty by frontloading rate cuts in the coming months, economists have said.

They expect the central bank’s monetary policy committee (MPC) to go for another 25 basis points (bps) cut when it meets for the bimonthly review in June.

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