The Reserve Bank of India is expected to reduce the policy repo rate by 25 basis points at the Monetary Policy Committee meeting started Monday. This would follow February’s 25-bps cut—the first in five years—and reflect changes in domestic macroeconomic conditions that support continued monetary easing. Polls conducted by leading financial publications and agencies point to a consensus expectation of a rate cut this Wednesday when the outcome is announced.Recent inflation data has come in below projections. Consumer Price Index readings for January and February were lower than expected, largely due to a decline in food prices. Core inflation remains at around 4%, supported by muted global commodity prices and restrained domestic demand. Institutional forecasts for average inflation in 2025-26 now stand at approximately 4%, down from earlier estimates of 4.3% to 4.5%. The inflation in February was at 3.6%, below the medium target of 4%, providing scope for policy accommodation.
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