As the new quarter kicks off, India’s macro narrative is walking a fine line. The Reserve Bank of India (RBI) is easing more confidently, liquidity is flush, and early monsoon forecasts look positive. But risks are circling - from creeping rupee pressure and patchy capital flows to new scrutiny on external financing and card spending. With elections behind us and global headwinds intensifying, June will test whether India’s balancing act can hold.
Monetary Policy
We are betting on another 25bp rate cut in June, which would bring the repo rate to 5.75%. The RBI has already delivered 50bp in cuts this year and seems in no rush to stop. Inflation remains well behaved - sitting below 5% - and the monsoon outlook is supportive. But the window for further easing could narrow if external volatility spills over.
We expect the June policy to come with more forward guidance - likely a reaffirmation of the RBI’s dovish tilt, but with a nudge toward data dependency. The risk isn’t inflation, it’s ...
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