The Reserve Bank of India (RBI) may cut interest rates after a brief pause as India could require additional liquidity in the second half of FY26. According to a report by Angel One’s research division, Ionic Wealth, lower inflation and declining food prices are creating space for easing.
The Reserve Bank of India (RBI), headquartered in Mumbai, Maharashtra, is likely to reduce interest rates in the second half of the financial year 2025–26 (H2 FY26), following a short pause, according to the latest Ionic Wealth report by Angel One.
The central bank’s move would be driven by an expected need for additional liquidity in the Indian economy, coupled with lower inflation, particularly in food prices. The RBI, which manages monetary policy and controls inflation and liquidity in the country, has been on a cautious path amid fluctuating inflation trends and global macroeconomic signals.
The report highlighted that falling vegetable and pulse prices, aided by strong harvests, have helped bring inflation under control. This improvement is giving the RBI greater flexibility to consider monetary easing in the latter part of FY26.
“The likelihood of rate cuts in H2 FY26 is increasing, especially as economic conditions may demand more liquidity support,” the Ionic Wealth report stated.
The Consumer Price Index (CPI) inflation data showed a consistent cooling trend, which supports the view that easing rates will not risk derailing price stability.
While the RBI had earlier indicated a cautious approach, analysts now believe the monetary policy stance may shift, depending on the evolving economic environment.
Angel One’s Ionic Wealth report suggests that supportive rate cuts may also aid sectors like manufacturing and real estate, where access to cheaper credit is crucial. However, any such decisions will be taken based on quarterly economic indicators and global cues.
If conditions remain stable, this would mark a pivot in India’s monetary policy from control to growth stimulation during FY26.
