Retail inflation in India fell to a seven-month low of 3.61% in February, fueled by a continued decline in food inflation, according to data released by the government on March 12. The lower-than-expected Consumer Price Index (CPI) inflation, which is also below the Reserve Bank of India’s (RBI) medium-term target of 4%, has intensified expectations of an interest rate cut in April.<\/p>\n
With this data supporting a dovish stance by the central bank, economists foresee a possible 25 basis points (bps) cut in the April monetary policy meeting, with another 25 bps cut potentially following in June.<\/p>\n
\u2714 India’s retail inflation eases to 3.61% in February, a seven-month low
\u2714 Food inflation falls below 6% for the first time since September 2024
\u2714 RBI may infuse \u20b92 lakh crore liquidity in FY26 to support rate transmission
\u2714 Economists predict a 25 bps rate cut in April, with a further 25 bps cut likely in June
\u2714 RBI\u2019s monetary policy committee (MPC) acknowledges a shift in domestic growth and inflation balance<\/p>\n
The decline in headline inflation to 3.61% in February marks only the third instance in FY25 where inflation has slipped below the 4% target set by the RBI. This inflation figure was lower than the market consensus, as the median estimate of 19 economists polled by MC had projected inflation at 3.8%.<\/p>\n
One of the major contributors to the easing inflation trend has been falling food prices. Food inflation dropped below 6% for the first time since September 2024, extending its decline from January\u2019s reading of 6% year-on-year. The continued easing of food inflation has provided further room for monetary policy easing.<\/p>\n
Market analysts believe that with inflation cooling faster than expected, the RBI\u2019s monetary policy committee (MPC) may shift its focus toward supporting economic growth through rate cuts and liquidity measures.<\/p>\n
With inflation easing faster than projected, economists believe that the RBI has enough room to consider rate cuts sooner than previously expected.<\/p>\n
The RBI had last cut the repo rate by 25 bps in February, bringing it down to 6.25%, while keeping the Standing Deposit Facility (SDF), Marginal Standing Facility (MSF), and Bank Rates unchanged at 6.5%.<\/p>\n
Between May 2022 and February 2023, the RBI hiked rates by 250 bps in a bid to curb inflation. However, since April 2023, the repo rate has remained steady at 6.5% as the central bank focused on controlling inflation and bringing it toward its medium-term target of 4%.<\/p>\n
Beyond rate cuts, economists expect RBI to announce further liquidity measures to ensure the effective transmission of monetary policy.<\/p>\n
According to Gaura Sengupta, In the past few months, the RBI has injected nearly \u20b93 lakh crore of durable liquidity through Variable Rate Repo (VRR) auctions, Open Market Operations (OMOs), and forex swaps to stabilize the banking system.<\/p>\n The minutes from RBI\u2019s February monetary policy meeting suggest that members of the Monetary Policy Committee (MPC) are leaning toward a dovish stance due to slower economic growth and easing inflation.<\/p>\n Deputy Governor M Rajeshwar Rao emphasized that: RBI Governor Sanjay Malhotra also hinted at a lower policy rate in the near term: With inflation below the 4% target and economic growth concerns rising, all eyes are on the RBI\u2019s April monetary policy meeting. Key factors to monitor include:<\/p>\n \u2714 The RBI\u2019s stance on repo rate cuts (25 bps cut expected in April) With inflation cooling and growth risks rising, the RBI has a window to shift toward policy easing, a move that could benefit borrowers and the broader economy in the coming quarters.<\/p>\n","protected":false},"excerpt":{"rendered":" Retail Inflation Drops to 3.61%, Raising Expectations of Monetary Policy Easing Retail inflation in India fell to a seven-month low of 3.61% in February, fueled by a continued decline in food inflation, according to data released by the government on March 12. The lower-than-expected Consumer Price Index (CPI) inflation, which is also below the Reserve […]<\/p>\n","protected":false},"author":4,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1362],"tags":[],"ppma_author":[1331],"class_list":{"0":"post-5414","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-and-economy-news"}," _eael_post_view_count":0,"authors":[{"term_id":1331,"user_id":4,"is_guest":0,"slug":"sourabh","display_name":"Sourabh Sharma","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/11\/Sourabh-Sharma.png"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=5414"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5414\/revisions"}],"predecessor-version":[{"id":5416,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/5414\/revisions\/5416"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/5415"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=5414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=5414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=5414"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=5414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
“We expect further liquidity infusion of \u20b92 lakh crore in FY26 to ensure system liquidity remains positive. This is essential for the smooth transmission of rate cuts.”<\/em><\/p>\nRBI Officials Signal Shift Toward a More Dovish Policy Stance<\/h2>\n
MPC Minutes Indicate Concern Over Growth & Favorable Inflation Trends<\/h3>\n
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\u201cSince the December 2024 policy, there has been a shift in the growth-inflation balance. While inflation is softening, growth outcomes have been weaker. Rising global market uncertainties and trade policies further cloud India\u2019s growth outlook.\u201d<\/em><\/p>\n<\/li>\n
\u201cGiven the macroeconomic outlook, where inflation is aligning with the target, and monetary policy is forward-looking, I believe a lower policy rate is appropriate at this juncture.\u201d<\/em><\/p>\n<\/li>\n<\/ul>\nInvestors and Policymakers?<\/h2>\n
\u2714 The scale of liquidity infusion measures (\u20b92 lakh crore in FY26 projected)
\u2714 Global financial market trends and their impact on Indian trade and growth
\u2714 Foreign portfolio investor (FPI) flows into Indian markets<\/p>\n