RBI policy outlook: Morgan Stanley sees two 25 bps cuts by December; inflation forecast slashed to 2.4% for FY26

Sep 16, 2025 - 18:30
RBI policy outlook: Morgan Stanley sees two 25 bps cuts by December; inflation forecast slashed to 2.4% for FY26

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Morgan Stanley projects the RBI to cut policy rates by 25 bps each in October and December, potentially bringing the terminal rate to 5%. This easing cycle is driven by sustained disinflation, with CPI inflation expected to average 2.4% in FY26, significantly below the RBI's 4% target. Food price softness and easing input costs support this benign inflation trend.

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