The Reserve Bank of India (RBI) may reduce interest rates in the coming months as inflation expectations have dropped sharply. The Bank of Baroda said the repo rate remains at 5.5 per cent, but RBI can ease rates to support growth.
Recent GST rate cuts and festive season spending are expected to boost domestic consumption. These measures could counter global economic challenges and strengthen India’s growth this quarter. The Monetary Policy Committee (MPC) kept a neutral stance while watching tariff changes and GST rationalisation.
India’s growth projection for FY26 has risen to 6.8 per cent from 6.5 per cent. Inflation is now expected at 2.6 per cent instead of 3.1 per cent. High-frequency indicators like air passenger traffic, port cargo, and rail freight show slight slowdown. Meanwhile, diesel consumption, government spending, and bank credit have improved.
The Bank of Baroda estimated GST cuts and festive spending could raise consumption by Rs 12 lakh crore to Rs 14 lakh crore. Wedding-related expenses may contribute a large share. Strong domestic consumption keeps India as the fastest-growing major economy in the world.
