Softening inflation gives RBI room to cut rates to 5%: Economists

• Economists suggest the RBI has room to cut policy rates, potentially to 5%, as inflation softens.
• India's November inflation rose to 0.71% month-on-month, but a clearer disinflation trend is emerging.
• HDFC Bank's Sakshi Gupta expects inflation to remain within the RBI's target range for the next two quarters, reinforcing the case for rate cuts.
• While inflation is benign, bond markets are focused on heavy government borrowing, which could limit aggressive easing.
• The outlook for monetary easing depends on market demand absorption, the upcoming Budget, and potential bond index inclusion.

Why It Matters: Potential RBI rate cuts due to easing inflation could affect your finances.