Overview
- The forecast is rooted in repeated downside surprises in India’s headline CPI inflation.
- This is a research projection from Morgan Stanley rather than an official RBI decision.
- Following a cut, the RBI is expected to adopt a wait-and-watch stance to gauge the combined effects of easing across rates, liquidity, and regulation.
- Morgan Stanley expects headline inflation to align near the 4% target in 2026–27, with food and core CPI converging around 4–4.2%.
- The outlook factors in gradual fiscal consolidation with capital expenditure priority and a stable external position with the current account deficit near or below 1% of GDP.