The Reserve Bank of India (RBI), in its October policy meeting, kept the repo rate unchanged at 5.5% and maintained its neutral stance for the second consecutive meeting. Morgan Stanley noted that the RBI may cut the policy rate in the next MPC meeting in December and again in February 2026, which could bring the repo rate down to 5%.

“We see the possibility of a rate cut of 25 bps in the December policy, in line with the evolving domestic growth- inflation trends,” the report noted.

Morgan Stanley sees inflation below 4% in FY26–27

While the RBI upgraded its GDP forecast for FY26 to 6.8% YoY from 6.5% earlier, it also indicated a potential moderation in growth in the first half of FY26 due to trade and tariff-related headwinds. The RBI also lowered its headline CPI inflation

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