Morgan Stanley predicts the Reserve Bank of India will begin lowering interest rates in December, with a second reduction following in February 2026. The brokerage expects the repo rate to fall from its current 5.50 percent to 5 percent by late 2026 as inflation pressures ease. Lower borrowing costs would benefit households and businesses while supporting consumption and investment across the economy.
The central bank held rates steady at 5.5 percent during its October 1 policy review, following an unchanged rate at the previous meeting. Two committee members advocated shifting toward a more accommodative stance as soft inflation and weak nominal growth create conditions for easing. Morgan Stanley noted the RBI will monitor U.S. interest rate movements and commodity prices before determining the pace of rate cuts. The projected decline would mark the lowest policy rate in recent years, boosting credit demand in the housing, automobile, and infrastructure sectors.
The central bank held rates steady at 5.5 percent during its October 1 policy review, following an unchanged rate at the previous meeting. Two committee members advocated shifting toward a more accommodative stance as soft inflation and weak nominal growth create conditions for easing. Morgan Stanley noted the RBI will monitor U.S. interest rate movements and commodity prices before determining the pace of rate cuts. The projected decline would mark the lowest policy rate in recent years, boosting credit demand in the housing, automobile, and infrastructure sectors.
