RBI's Big Surprise: Interest Rate Cuts to Boost Economy & Benefit Debt Holders

• RBI expected to cut interest rates by another 50 basis points in 2026, following 125 bps reduction in 2025, as per IIFL Capital.
• Rate cuts are driven by a high gap between RBI's repo rate and core inflation (2.8% vs 7-year average 1.1%), indicating controlled inflation.
• Lower interest rates are projected to accelerate economic growth, improve credit conditions, and benefit banks.
• India's GDP growth expected to rebound in 2026, supported by reforms, trade agreements with European Union, and strong Rupee.
• Equity markets show improved earnings estimates; Nifty expected to return 15%, with small-caps recovering later. Inflation risks remain low.

Why It Matters: RBI's anticipated rate cuts signal economic growth, lower inflation, and market opportunities.