Mumbai, June 4 -- The Reserve Bank of India (RBI) could go for a "jumbo rate cut" of 50 basis points on Friday, said SBI research report. The sharp moderation in CPI inflation, hitting a 67-month low of 3.34% in Mar'25 due to sharp correction in food inflation bodes well for lowering the average CPI headline forecast for FY26 below 4% now, the report stated. Nominal GDP growth is expected to be in the range of 9-9.5% for FY26 (Budget: 10%), signifying a Goldilocks period to slash the policy rates given the low growth and low inflation.

With multi-year low inflation in March and benign inflation expectations going forward, we expect rate cuts of 75 basis points in June and August (H1) and another 50 bps cut in H2 i.e. cumulative cuts of 1...