Low inflation fuels hopes of 3 rate cuts in June-Oct

With the consumer inflation rate staying below the Reserve Bank of India's (RBI's) 4 per cent target for two consecutive months, economists foresee three back-to-back reductions in the policy repo rate, starting with a 25 basis point cut in June.

- ANJALI KUMARI

The RBI's Monetary Policy Committee (MPC) has cut the policy repo rate by a cumulative 50 basis points since February, equally divided over two credit policies.

The next review of the MPC is during June 4-6.

"The growth-inflation outlook remains favourable for a further easing of policy rates with downside risks to growth and inflation," said Gaura Sen Gupta, chief economist, IDFC FIRST Bank.

"On domestic factors alone, there is space to cut policy rates by 75 basis points in the rest of FY26 to bring policy rates to neutral territory. Given that it takes six to nine months for transmission to take place, the RBI is likely to continue with back-to-back rate cuts (25 basis points each in June, August and October)," said Sen Gupta.