Hopes of rate cuts in Finmin report

With price pressures easing and growth remaining a priority, RBI has cut policy rates 3 times in 2025

- Rhik Kundu

The finance ministry on Monday held out hopes of further interest rate cuts, citing muted core inflation, coupled with headline inflation falling well below the Reserve Bank of India's (RBI's) 4% target.

"Core inflation remains subdued, and overall inflation is comfortably below the RBI's 4% target, affording room for the easing cycle to be sustained," the ministry noted in its June Monthly Economic Review.

The RBI has projected headline inflation at 3.4% for the second quarter of FY26, while actual inflation in Q1 came in below the central bank's target.

"It appears likely that the full fiscal year inflation rate would undershoot the central bank's expectation of 3.7%," the ministry added.