Nomura sees lower inflation in FY26 at 3.3%

New Delhi: Nomura lowered India's inflation forecast to 3.3% in FY26 from 3.9% earlier and said cooling inflation will create more space for monetary policy easing. A strong winter crop harvest, decline in pulse prices due to higher supply, lower agricultural input costs and potentially favourable monsoons should lower food inflation, it said.

Meanwhile, a negative output gap, lower manufacturing input costs and moderating wage growth are likely to keep core inflation capped, it added.

The Reserve Bank of India's monetary policy committee (MPC) announced a 50-basis points policy rate cut to 5.5% on Friday. Nomura projects the rate to decline to 5% by year-end.- Our Bureau