rbi Expected to Cut Rates Further Amid Slowing Growth

The Reserve Bank of India (RBI) is expected to further cut interest rates by a total of 100 basis points in its easing cycle. This is according to a report, which anticipates two more rate cuts of 25 bps each going forward. The central bank's actions aim to support the economy amidst slower growth, while keeping inflation under control. Morgan Stanley expects the RBI to bring the repo rate down to 5.5% with this easing. Risks remain tilted towards more rate cuts if global growth weakens, especially with a potential recession in the United States. This could negatively impact India's growth. In addition to rate cuts, the RBI is expected to use other tools to support the economy. These include ensuring liquidity in the financial system and easing regulations to boost credit growth. The government is expected to maintain its fiscal consolidation path, focusing on increasing capital expenditure to drive growth.