SBI Research Sees Up to 125 bps RBI Rate Cuts in FY26
Why in the news
SBI Research argued that cooler inflation leaves room for more RBI easing through FY26.
Key facts
- Repo rate was 6.25% after 50 bps cuts in February and April 2025; it could fall below neutral by March 2026.
- Inflation was expected to head to the 4% target.
- Bigger 50 bps cuts were judged more effective than smaller 25 bps ones.
- OMOs of ₹1.25 trillion in May 2025 would keep system liquidity surplus at ₹2 trillion, offsetting maturing short-dollar forwards, FII outflows and exchange-rate pressure.
| Period | Cut |
|---|---|
| H1 FY26 (June, August reviews) | 75 bps |
| H2 FY26 | 50 bps |
Significance
- Cheaper money may support private investment, durable growth and credit in rate-sensitive sectors.
Exam angle
- Terms: bps, neutral rate, OMO; inflation target 4%.