New Delhi, Dec 20 (NationPress) Unless there is a significant downturn in growth dynamics, the current cycle of interest rate reductions by the Reserve Bank of India (RBI) appears to have reached its conclusion. The central bank is expected to adopt a prolonged pause while maintaining a “neutral” stance, according to a report released on Saturday.

The report from Yes Bank highlighted that a newly introduced consumer price index (CPI) featuring reduced food weightage may diminish the advantages gained from declining food prices, limiting the potential for additional rate cuts unless growth materially deteriorates.

The RBI's strategy to ensure adequate liquidity and align the operative rate with the repo rate is anticipated to persist.

"The minutes from the December meeting underscore the RBI’s commitment to sustaining growth momentum. Although growth exceeded expectations in the first half, a slowdown is anticipated in the latter half," the report noted.

Members of the Monetary Policy Committee (MPC) acknowledged that inflation remains below the established lower threshold of the Flexible Inflation Targeting (FIT) framework, thus requiring counter-cyclical measures from the central bank.

The RBI projects that both headline and core retail inflation will be anchored at the 4 percent mark during the first half of FY27.

The forthcoming MPC meeting is scheduled to take place after the budget announcement, coinciding with a new CPI series that will adjust the base and restructure the weight distributions.

Yes Bank also mentioned that the RBI has revised its FY26 growth forecast to 7.3 percent, attributing this to domestic factors such as income tax reforms, easing monetary policies, and a GST-driven rationalization that is expected to support sustained growth in the latter half.

A recent analysis indicated that the RBI's 25 basis-point reduction to a 5.25 percent policy repo rate, coupled with lower CPI inflation projections and enhanced GDP growth estimates, signals confidence in the sustainability of domestic demand.

The earnings season for the September quarter of FY26 demonstrated widespread strength, with various sectors—including hospitals, capital goods, cement, electronics manufacturing services, ports, non-banking financial companies (NBFCs), and telecommunications—reporting double-digit growth in both EBITDA and profits.