The economy is cooling but remains primed to grow by 6-6.5% per year between 2024 and 2026, which would put India on course to become the world’s third-largest economy in the next couple of years. Headline CPI inflation is likely to remain close to the RBI’s 4% target over the coming months, setting the stage for the RBI to begin loosening monetary policy from December. We think that the repo rate will fall to 5.50% (from 6.50% currently) in the upcoming easing cycle. Our forecast is a bit more dovish than the consensus expectation of 6.00%.
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