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HDFC Bank Principal Economist Sakshi Gupta on RBI Policy
This story was originally published at 14:32 IST on 5 December 2025
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MUMBAI – Sakshi Gupta, principal economist, HDFC Bank, said the following on the Reserve Bank of India's fifth bi-monthly monetary policy statement for 2025-26 (Apr-Mar) detailed on Friday:
The RBI delivered a rate cut in line with our expectations, recognising the impending risks to growth and utilising the monetary space yielded by low inflation. While GDP growth had inched above 8% in the second quarter of FY26, the risk from external headwinds on exports continues to linger on. Moreover, the sustainability of the consumption pick-up during the festive season remains to be seen.
Given this backdrop, the rate cut rightly provides a further counter-cyclical push to consumption and growth. We anticipate inflation to remain below 4% up till the middle of the year (till June), which suggests that space for another rate cut remains in a situation that growth shows signs of faltering in the coming quarters. Alternatively, if the recent economic momentum continues, combined with a favourable trade deal announcement, this could be the end of the rate cut cycle. We expect GDP growth at 7.3% in FY26 and 6.5% in FY27. Inflation is expected at 2% in FY26 and 4% in FY27. The durable liquidity infusion through open-market-operation purchases and buy/sell swap are likely to help aid greater transmission of this rate cut, offsetting the drag from its recent foreign exchange intervention, and ease some of the upward pressure in the bond market. End
Compiled by Anjana Therese Antony
Filed by Nishant Maher
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