MUMBAI: The Reserve Bank of India’s inflation and growth outlook suggest the current policy rate may mark the end of the easing cycle, six analysts said on Wednesday, after the central bank held rates steady and kept its growth forecast unchanged.
The RBI has trimmed its key policy rate by 100 basis points since February.
While a Reuters poll had predicted one more 25 basis points cut this cycle, some analysts are now reassessing that view.
“Given the characterisation of monetary policy in the August meeting and the growth and inflation forecasts, we do not find much scope for an immediate rate cut,” said Samiran Chakraborty, chief economist at Citi.
The bank, which had earlier expected a 25 basis points cut in August, now sees the repo rate holding at 5.50% this cycle, up from its previous forecast of 5.25%.
The RBI retained its Jan–March inflation outlook at 4.4% and projects a rise to 4.9% in April–June 2026.
India’s retail inflation fell to a more than six-year low of 2.1% in June and is expected to hit a record low in July. Data is due to be released on August 12.
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However, RBI Governor Sanjay Malhotra said the sharp fall in headline inflation was driven by volatile food prices and is likely to pick up toward year-end.
“One year ahead, factoring in the April–June inflation forecast at 4.9% and the repo rate at 5.5%, the real rate buffer will narrow significantly. The terminal rate is likely to stay at 5.5% this year,” said Radhika Rao, senior economist at DBS Bank.
Analysts at Capital Economics, Bank of Baroda, Kotak Securities and Edelweiss Mutual Fund also said the central bank may have ended its easing cycle.
“There is little in today’s policy announcement to change our view that the easing cycle has come to an end,” said Shilan Shah, deputy chief emerging markets economist at Capital Economics.
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