Nomura drops interest rate cut in April due to firmer inflation and ‘stealth easing’ from the RBI

Nomura no longer expects India’s central bank to cut interest rates in April, it said on Friday, as inflation is expected to rise and given the “stealth” policy easing that has already taken place. This comes after India released data on consumer price inflation on Thursday under a new series that changes the weighting of key goods such as food and housing and adds several online services for the first time to reflect changing consumption patterns.

Nomura has raised its inflation projection for the next fiscal year, which starts in April, to 4.1 percent from 3.9 percent based on the old series.

Last week, Nomura estimated a 65 percent probability that the Reserve Bank of India would cut its policy rate by 25 basis points to 5 percent.

It now joins the likes of Capital Economics and ANZ in no longer expecting a rate cut in April.

Nomura said there has in fact already been a “stealth easing” towards a 5 percent rate, strengthening the case for the RBI to pause.

The RBI focuses on the weighted average call market rate around the repo rate. The call rate has been around 5 percent in recent days, which is the bottom of the monetary policy corridor, reducing the need for rate cuts, the brokerage said.

Based on the new series, Nomura expects an increase of 10 basis points over its inflation forecast for the January-June period, rising to 20-50 basis points in the second half of the fiscal year.

The broker points out that inflation is expected to return to below 4 percent in a year’s time, limiting the need for an interest rate increase.

The RBI targets inflation within a range of 2 percent to 6 percent.

Published on February 13, 2026