New Delhi: Morgan Stanley on Wednesday said that in terms of policy response, it sees the likelihood of another rate cut by the RBI in Q4 (likely in October policy) amid headwinds from tariff-related developments. In a unanimous vote, the RBI MPC kept the policy rate unchanged at 5.5 per cent, in line with expectations. All members voted to retain the stance at neutral.

“The policy statement noted that the benign trend in the headline inflation print is likely to be transitory, on the back to lower food prices, growth remains on expected lines and transmission of past rate cuts is underway, warranting a pause,” according to the Morgan Stanley note.

RBI maintained its GDP forecast at 6.5 per cent YoY for FY26, backed by resilience in domestic demand. On external demand, it continues to remain watchful due to uncertainty, led by ongoing tariff negotiations, geopolitical tensions and volatile global financial markets.