Economists call on RBI for Dec rate cut amid record low inflation

Core Viewpoint - Economists advocate for a repo rate cut by the Reserve Bank of India (RBI) in December, citing record low consumer inflation and the potential for economic growth without significant inflation impact [10][11]. Economic Growth and Inflation Projections - Asia's No. 2 economy is expected to grow between 6.8% to 7% this fiscal year, with consumer inflation projected at 1.8% to 2% [10]. - For FY27, GDP growth is estimated to be between 6.5% to 7%, while inflation is anticipated to be in the range of 3.5% to 4% [2][10]. Policy Considerations - The RBI is likely to revise its inflation forecasts downwards and growth forecasts upwards due to the record low inflation of 0.25% in October, influenced by falling food prices and GST rationalization [6][11]. - The uncertainty surrounding a pending trade agreement with the US adds complexity to the RBI's policy decisions [8][11]. Empirical Evidence and Economic Advisory - Empirical evidence suggests that the costs of missed easing cycles are more detrimental than the costs associated with early easing, indicating that a rate cut now would minimize expected losses [3][10]. - Economists attending pre-policy consultations expressed that a rate cut would enhance growth without significantly affecting inflation [11].