The average inflation for fiscal year 2026 will be 4.5 percent.
Amid speculations of interest rate cut in February after Sanjay Malhotra takes over as the new Governor of Reserve Bank of India from Wednesday, Axis Bank Chief Economist Neelkanth Mishra has clearly said that there is no scope for interest rate cut right now. Is. He said on Wednesday that due to increase in inflation, there will be no cut in interest rates in the next monetary policy review to be held in February and in the entire financial year 2025-26. According to PTI news, Mishra said that change of leadership in RBI will not bring any change and he said that the institutional capacity is very strong.
Reduction is not possible for the next 13-14 months
According to the news, the Chief Economist of Axis Bank said that rate cut will not be possible for the next 13-14 months. He said that the average inflation for the financial year 2026 will be 4.5 percent. Barring Q3FY26, where the headline number will ease to the RBI’s 4 per cent target at a higher base, the headline number will remain between 4.5-5 per cent till the end of FY2026, leaving little scope for rate cuts. .
What does it mean if the reduction step is not decisive?
Mishra also said that even if the Reserve Bank cuts rates to boost growth, a 0.50 per cent reduction in its key rates would not be a decisive step to help the growth process. He says that when you take steps to cut rates, it should be decisive. A 0.50 percent cut is neither here nor there. Unlike some economists who believe that GDP growth is at a seven-quarter low of 5.4 per cent, leading to a decline in trend growth, Mishra said he still considers 7 per cent as trend growth and added that the country will continue to grow in the fiscal year. It will achieve this in FY26 after a growth of 6.6 per cent in 2025.
The currency will fall further
He said the Center slowed down capital expenditure, while some regulatory actions by the RBI also hurt. They say the total cash transfer to women by states will increase to Rs 2.5 lakh crore in FY2026, compared to Rs 2 lakh crore estimated on an annual basis in FY25. Other states like Bihar, where elections are going to be held soon, will take such steps. It is expected that by the end of financial year 2026, the currency will fall further and it will come down to Rs 86.5 per dollar.
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