New Delhi, Feb. 2 -- After the Union Budget, all eyes are now on India's monetary policy committee (MPC) ahead of its final rate decision for this fiscal year (FY26). After repo rate cuts totalling 125 basis points (bps), the rate-cutting cycle is expected to now conclude, and policymakers may shift focus from the cost of funds to the quantum of liquidity.

The MPC is focused on growth and inflation, both of which are rebounding. Our growth nowcasting model, which tracks 40 high-frequency indicators, shows economic momentum strengthened to around 7% in the December quarter, which is 30bps higher than the model's estimate for the September quarter. Domestic demand has firmed-albeit unevenly-with improvements across vehicle sales, industria...