Global brokerages project more RBI rate cuts this fiscal

Amid growing global uncertainties, rising tariff tensions and signs of slower economic growth, analysts from Morgan Stanley and Crisil on Wednesday anticipated at least one or two more rate cuts this fiscal year.

Morgan Stanley expects another 25bps rate cut in the June policy meeting, with the possibility of a deeper easing cycle of 50 to 75 bps if growth remains subdued.

The RBI has downgraded its GDP forecast for FY26 to 6.5 per cent, from 6.7 per cent earlier, pointing to risks from global tariff hikes and weak investor sentiment.

Inflation, however, remains under control. Falling food prices have brought headline inflation below the central bank’s 4 per cent target which prompted the RBI to lower its CPI inflation projection to 4 per cent for FY26.

With this, Morgan Stanley believes the RBI will stay proactive in managing liquidity and rolling back regulatory tightening to ensure smooth transmission of policy moves.

Crisil echoed a similar outlook, calling the rate cut a ‘foregone conclusion’ due to weaker inflationary pressures and rising risks to growth.

“The RBI’s policy shift signals the start of a more durable rate reduction cycle,” said Dharmakirti Joshi, Chief Economist at Crisil, adding that at least two more rate cuts of 25bps each could be expected within the fiscal year.

Joshi also highlighted that although a normal monsoon forecast bodes well for food inflation, rising climate disruptions like heat waves need to be closely monitored.

“On the global front, aggressive US tariff hikes and retaliatory measures by other nations have made downside risks to global growth the base case scenario,” Joshi mentioned.