India's retail inflation fell below 4% in February for the first time in six months mainly due to a decline in vegetable prices, giving the central bank room to cut rates further in coming meetings. Annual retail inflation in February eased to 3.

The sharp decline in inflation has increased expectations for another rate cut by the RBI on April 9. If this occurs, it will mark the second rate reduction in just two months.

CPI is now well within RBIs main inflation target of 4%, warranting a possibility of yet another 25 bps rate cut from the central bank in the upcoming April 2025 policy. If that were the case, a repo rate cut would lead to further revision in home loan EMIs and fixed deposit rates by banks.