Global brokerage Nomura has withdrawn its earlier prediction that the Reserve Bank of India (RBI) would cut interest rates in April. The revision follows new inflation data and signs of what analysts describe as “stealth easing” in monetary policy.

The change highlights shifting expectations around India’s economic outlook and monetary policy direction.

📊 New inflation data changes outlook

India recently released consumer price inflation data under a new statistical series. The update changed the weighting of key items such as food and housing while also adding several online services to reflect modern consumption patterns.

Following the update, Nomura raised its inflation forecast for the next fiscal year to 4.1%, up from 3.9% under the previous series.

Because inflation now appears stronger than expected, analysts no longer anticipate an immediate rate cut.

Nomura no longer expects the RBI to cut rates in April.

Previously, the firm had assigned a 65% probability that the RBI would lower its policy rate by 25 basis points to 5%.

💰 “Stealth easing” reduces need for rate cuts

Nomura said policy easing has already occurred indirectly, which reduces the urgency for a formal rate cut.

The brokerage explained that the weighted average call money rate has remained near 5%, the floor of the monetary policy corridor.

Because the call rate sits close to the target level, financial conditions have effectively eased without an official rate reduction.

Analysts say “stealth easing” has already moved rates toward 5%.

This development strengthens the case for the RBI to pause further policy changes in the near term.

📈 Inflation forecast revised upward

Nomura expects inflation to rise slightly during the coming fiscal year. The brokerage forecasts a 10-basis-point increase in inflation during the January–June period under the new data series.

The forecast increases further later in the year, with 20–50 basis points of upside risk expected in the second half of the fiscal year.

However, the outlook remains relatively stable overall. Nomura expects one-year forward inflation to fall below 4%, which limits the need for rate hikes.

🏦 RBI’s inflation target remains central

The Reserve Bank of India targets inflation within a 2% to 6% range.

The revised forecasts suggest inflation will remain within this band. Therefore, policymakers may feel comfortable maintaining current rates for now.

Other major research groups, including Capital Economics and ANZ, have also dropped expectations for an April rate cut.

This growing consensus signals a broader shift in market expectations.

🌍 Implications for India’s economy

Interest rate decisions influence borrowing costs, investment and economic growth. As a result, the revised outlook could affect financial markets and business planning.

The decision to pause rate cuts may reflect confidence in the economy’s stability. Meanwhile, policymakers continue monitoring inflation and financial conditions closely.

Overall, the update shows how new data and market conditions can quickly reshape monetary policy expectations.