Business

RBI Frontloads Rate Cuts To Boost Growth Amid Low Inflation: Crisil

The Reserve Bank of India (RBI) has frontloaded its rate cuts to support economic growth, taking advantage of a benign inflation outlook, according to a Crisil report. The global ratings agency expects one more repo rate cut in the current fiscal (FY26), followed by a pause.

Crisil forecasts India’s GDP to grow at 6.5 per cent this fiscal, though risks remain due to US tariff hikes. It outlined several factors that could help India withstand global pressures.

Favourable Monsoon and Oil Prices to Cushion Global Impact

The report pointed to a positive outlook on rainfall and stable crude oil prices. It added that India’s strong external position — low current account deficit, low short-term debt, and ample forex reserves — will act as a buffer.

Rate cut transmission, income-tax reductions for the middle class, and low food inflation will help maintain domestic demand, Crisil stated. It added that a 100-basis point cut in the repo rate and an expected 100-bps CRR cut in the second half of FY26 will accelerate the transmission of monetary easing to broader interest rates.

Monetary Support Gains Traction Amid Neutral Policy Shift

Crisil said a sharp drop in inflation since the last policy review allowed the Monetary Policy Committee (MPC) to step up support. A healthy monsoon and low crude prices are likely to keep inflation near the RBI’s 4 per cent target this fiscal.

The RBI rate cuts are crucial in countering external headwinds and supporting consumption. Crisil observed that transmission to lending and deposit rates has begun. From February to May, deposit rates fell by 15 bps, home loan rates by 30 bps, and auto loan rates by 20 bps.

The MPC’s shift to a neutral stance signals a more data-driven approach. It also acknowledged limited policy space after the 100-bps cut already implemented. Crisil noted that surplus liquidity, especially after the expected CRR cut, will further ease interest rates.

Also Read: Jaishankar Reaffirms India’s Zero Tolerance Policy On Terrorism In Talks With UK Foreign Secretary Lammy

Ajaypal Choudhary

Recent Posts

Hina Khan Hails 11 Years Of PM Modi’s Leadership; Highlights National Progress

As the nation marks 11 years under PM Modi's leadership, actress Hina Khan shares her…

10 hours ago

Subhash Ghai Hails PM Modi’s Transformative Vision For India

Subhash Ghai has praised PM Narendra Modi’s leadership for catalysing India’s growth and changing the…

10 hours ago

India & Central Asia Boost Rare Earth Cooperation At Delhi Meet

India and five Central Asian nations have agreed to deepen cooperation on rare earths and…

11 hours ago

PM Modi’s Beej Se Bazaar Tak Vision Reshapes Indian Agriculture

Prime Minister Modi has redefined Indian agriculture with the ‘Beej Se Bazaar Tak’ vision, transforming…

11 hours ago

EV Sales Cross 4% Mark In May; Signalling Steady Shift To Green Mobility

EV sales topped 4% of passenger vehicle retail in May 2025, signalling growing demand for…

11 hours ago

Self-Reliant Defence Industry Marks India’s Strategic Security Ascent

One year into Modi 3.0, reforms have reduced poverty, strengthened defence, and accelerated the digital…

12 hours ago