India’s central bank should shift away from its neutral monetary policy stance and deliver around 50 basis points of rate cuts over the next 12 months, according to a report by French asset manager Amundi. As per news agency ANI, the firm said the Reserve Bank of India (RBI) may need to act as economic growth could begin to soften in 2026 due to US tariffs that place India at a disadvantage compared to regional peers.
Amundi noted that domestic demand “remains the principal growth driver,” adding that despite the recent upgrade to GDP forecasts, it “continues to expect some deceleration in Calendar Year (CY) 26”. The report said the tariff burden on India is expected to ease in 2026, with growth likely to stay supported by domestic demand and aided by upcoming fiscal relief measures.According to the report, these measures include changes in the Goods and Services Tax (GST), lower income taxes, and the expected rollout of the Eighth Pay Commission by January 2026, steps that are likely to boost household consumption. However, Amundi highlighted that the recovery in private investment remains uneven and has recently been “disappointing” amid elevated global uncertainty.The report added that deregulation efforts could help revive the investment cycle, though external headwinds remain the biggest downside risk without stronger fiscal support. On inflation, Amundi expects headline price pressures to average between 4–5 per cent in CY26, supported by a favourable monsoon, soft global food and energy prices, and pass-through effects of GST changes.On the market outlook, the asset manager maintained a “slightly positive” view on Indian equities, as per ANI. It sees potential in infrastructure projects aimed at easing real bottlenecks, manufacturing aligned with global supply-chain shifts, and technologies that support financial inclusion.
