Inflation cools to 69-month low of 3.16%

THE SUSTAINED DISINFLATION trend augurs well for the economy, amid still-sluggish urban consumption. Easing of the concerns about global tariff war after the US-China temporary deal to cut tariffs from the punitive levels, and the benefits to taxpayers from income tax cuts announced in the Budget, are expected to positively impact short-term economic growth.

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"Moderating inflation should provide comfort to the Monetary Policy Committee (MPC) in undertaking further rate cuts. We expect a further 50 bps reduction in the policy rate in FY26," chief economist at CareEdge Ratings Rajani Sinha said. Given the current inflation trajectory a further 25-basis point rate cut is expected in the June policy review," chief economist at Crisil Dharmakirti Joshi said.

"If the GDP growth print for Q4 FY2025 does not report an acceleration from the 6.2% seen for Q3 FY2025, the MPC may consider front-loading the rate easing, with a 50 bps cut in the upcoming review," chief economist at Icra Aditi Nayar said.