India’s central bank is widely expected to keep the policy repo rate unchanged in its upcoming monetary policy announcement on Wednesday. However, the possibility of further easing in subsequent meetings has increased, particularly following the recent US tariffs on Indian exports. This development has introduced new risks to India’s growth outlook, just as domestic inflation has eased sharply, strengthening the case for a more accommodative monetary stance.The Reserve Bank of India’s Monetary Policy Committee delivered a 50-basis point cut in June and adopted a neutral stance, indicating a shift to a data-dependent approach. This followed back-to-back rate reductions earlier this year, which were aimed at supporting growth amid subdued inflation. With headline CPI inflation slowing to 2.1% in June, the lowest level since February 2019, and core inflation also trending below 4%, monetary policy space has widened.
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