Credit Suisse economist Neelkanth Mishra has said India's monetary policy still has room for meaningful easing, with the repo rate potentially falling to a decade low over the coming quarters if macroeconomic conditions remain supportive. His view adds to a growing debate in markets over how quickly the Reserve Bank of India may pivot from a prolonged tightening and hold phase toward a more accommodative stance.
Mishra's assessment is significant because it comes at a time when investors are closely watching the interplay between inflation, domestic demand and global financial conditions. A lower policy rate would typically reduce borrowing costs across the economy, support credit growth and improve sentiment in rate-sensitive sectors such as banking, real estate and autos. For equity markets, the prospect of easier money often acts as a valuation tailwind, especially when earnings growth is expected to broaden beyond a narrow set of large-cap names.
Rate Path In Focus
Mishra's core argument is that India may be entering a phase where the central bank has more flexibility to cut rates without jeopardising price stability. The repo rate, which anchors the cost of funds in the economy, has remained elevated as policymakers prioritised inflation control and financial stability. A move toward a decade low would signal that the RBI sees sufficient evidence of cooling inflation and durable macro resilience to justify a more supportive policy stance.
The timing matters. Markets have spent much of the year balancing optimism over India's structural growth story against concerns about sticky inflation, uneven consumption and the possibility of delayed monetary easing. Mishra's comments suggest that if inflation continues to moderate and growth remains orderly, the RBI could have room to begin a measured easing cycle rather than waiting for a sharper slowdown to force its hand.
That would be important for corporate India, where financing costs have remained a constraint on expansion plans and consumer demand in interest-sensitive categories. Lower rates could also help improve liquidity conditions, which in turn may support capital market activity, including fund-raising, secondary market participation and a healthier IPO pipeline.
December Could Lift Sentiment
Mishra also pointed to December as a possible turning point for markets, saying investors may see a robust and widespread pickup beginning then. In practical terms, that implies a broader participation in the rally rather than a narrow advance led by a handful of defensives or index heavyweights.
Such a shift would be welcomed by fund managers who have been waiting for earnings breadth to improve. A more synchronised recovery across consumption, industrials and financials could strengthen the case for higher index levels, especially if accompanied by policy support and stable global cues. For IPO investors as well, a stronger market backdrop tends to improve pricing power and post-listing performance, both of which are crucial for maintaining issuance momentum.
The market's reaction will depend on whether Mishra's thesis is borne out by incoming data. Inflation prints, industrial activity, credit growth and corporate guidance over the next few months will be closely watched for confirmation that demand is firming and that the economy can absorb lower rates without overheating. Global factors, including US yields and risk appetite, will also shape the pace at which domestic equities can re-rate.
Still, Mishra's remarks reinforce a constructive narrative that has been building among some economists and investors: India may be approaching a policy and market inflection point. If the RBI does begin to cut rates in the coming quarters, and if December indeed marks a broader improvement in market breadth, the result could be a more durable rally than the stop-start advances seen earlier in the year.
For now, the message from the economist is clear: the room for easing is not exhausted, and the market may be underestimating how much support lower rates could provide to growth, sentiment and indices in the months ahead.