Weak urban demand, global uncertainty open door for policy rate cut

Soft urban consumption and an uncertain external demand environment have created scope for the Reserve Bank of India (RBI) to ease policy rates, a report by ICICI Bank said, as the central bank navigates a data-dependent approach amid a neutral stance.

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"Monetary policy is forward-looking and next year inflation prints are likely to move higher on the back of a low base, but weak urban and uncertain external demand (tariffs) has opened up room for easing," the report added.

In light of easing inflation and subdued growth momentum, the Monetary Policy Committee (MPC) could find room to lower the policy rate by 25 basis points as early as August, according to a report by ICICI Bank.