GST reforms expected to create room for rate cut

The Reserve Bank of India (RBI) has projected the retail-inflation rate for 2025-26 at 3.1 per cent.

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"While the GST cut has opened up room for more rate cuts, the MPC might use its limited monetary space more cautiously in an uncertain global environment," Sahay added. The six-member rate-setting panel reduced the policy repo rate by a sharp 100 bps since February. The rate was kept unchanged in the last monetary policy review meeting.

A cut will depend on how the central bank assesses growth, after the 50 per cent tariff imposed by the United States, with 25 per cent of it coming into effect in August. The RBI had projected 6.5 per cent growth in gross domestic product (GDP) for FY26.