Nomura remains out-of-consensus as it maintains its call for a 25 basis points (bps) repo rate cut at the Reserve Bank of India’s (RBI) upcoming policy meeting on December 6, projecting the rate to drop to 6.25%. The brokerage cites weaker growth dynamics and a benign forward inflation outlook over the next year as the primary reasons. Nomura believes this cut will not lead to significant policy trade-offs at this stage.
The firm expects the RBI to continue with a total of 100 bps rate cuts by mid-2025, bringing the terminal rate down to 5.5%. This outlook underscores the RBI’s potential readiness to provide liquidity and support economic growth amid slowing momentum.
This anticipated rate cut comes against the backdrop of India’s Q2 GDP growth of 5.4%, the lowest since Q3 FY23, signaling the need for proactive monetary measures to foster economic recovery.
