‘More rate cuts unlikely as headline inflation will rise’

The Reserve Bank of India (RBI) is unlikely to cut interest rates further in the current cycle as rising headline inflation limits space for monetary easing, Neelkanth Mishra, chiefeconomist at Axis Bank and head of global research at Axis Capital, said on Tuesday.

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While no more rate cuts are expected, Mishra said that keeping rates “lower for longer” is a reasonable scenario to factor in. “I don’t expect more rate cuts because headline inflation will start rising,” said Mishra, also a part-time member of the Economic Advisory Council to the Prime Minister of India.

He expects headline inflation to average around 4% in FY27.