New Delhi, April 16
The RBI has already embarked on a rate cutting cycle, and a report by HSBC Global Research said on Wednesday that it expects a 25bp rate cut in each of the June and August policy meetings, taking the repo rate down to 5.5 per cent this fiscal (FY26).
Furthermore, it also expects easy liquidity conditions to persist and help in the transmission of rate cuts.
The CPI inflation in March came in at 3.3 per cent, lower than the market expectation of 3.5 per cent.
Food prices remained in deflation for the third month, down 0.7 per cent on-month, led by falling vegetable, pulses and egg, fish and meat prices.
The sequential momentum in cereal and milk prices was benign, while that of sugar and fruits was high.
“The April inflation print is trending close to March levels. Vegetable prices in the first 10 days of April have eased by 0 to 5 per cent (on-month) on the back of a sharp fall in onion and tomato prices,” said the HSBC report.
It forecasts CPI headline inflation to average 3.7 per cent in FY26, well below RBI target and forecast (of 4 per cent).