RBI's Monetary Policy Committee May Go For Another Repo Rate Cut: CRISIL

(MENAFN- KNN India) New Delhi, July 17 (KNN) Rating agency Crisil has projected retail inflation, measured by the Consumer Price Index (CPI), to average 4 percent in the current financial year (FY26), down from 4.6 percent in FY25, driven by expectations of softer food prices and lower commodity costs.

In its latest research report, Crisil noted that food inflation is likely to ease on the back of the Indian Meteorological Department's (IMD) forecast of an above-normal monsoon.

Non-food inflation is also expected to remain subdued due to benign global commodity prices.

CPI inflation is the primary gauge used by the Reserve Bank of India's Monetary Policy Committee (MPC) for setting interest rates.

Reflecting the moderation in inflation, Crisil expects the MPC to implement another repo rate cut during the fiscal year, followed by a pause.

The repo rate currently stands at 5.5 percent after a 50 basis point cut in June.

The agency estimates India's GDP growth for FY26 at 6.5 percent, while cautioning that risks remain, particularly from global developments such as US tariff moves that could impact exports.

Domestically, an adequate monsoon and the recent monetary easing are expected to support growth.

Crisil also observed a decline in bank credit growth in the first quarter, based on data available up to May 2025, suggesting ongoing weakness in the credit cycle.

Despite this, liquidity conditions remain supportive, which could aid broader financial stability.

The report flagged volatility in capital flows and currency markets due to ongoing global uncertainties.

(KNN Bureau)

MENAFN17072025000155011030ID1109815240