The Reserve Bank of India is expected to cut its interest rates to 6.0% from the current 6.25% in early 2017 on the back of low inflation in the near-term, a poll conducted by Reuters has found. On October 4, the newly-formed Monetary Policy Committee had cut RBI's repo rate – the rate at which it lends to commercial banks – by 25 basis points (or 0.25%) to 6.25%. Since early 2015, the central bank has slashed 175 basis points from its repo rate.

According to the Reuters poll, India's gross domestic product will grow by 7.7% for the 2016-'17 financial year and by 7.8% in 2017-'18. The figures are marginally higher than the International Monetary Fund's projection of a 7.6% growth in GDP for both years. Economic growth has been supported by higher consumption in urban areas as well as hikes in government wages, "sufficient banking sector liquidity and robust foreign direct investment inflows", according to HSBC's chief India economist, Pranjul Bhandari.

The RBI is also expected to hold rates for at least 12 months after the expected cut. The repo rate helps control inflation, which is one of the central bank's major concerns. While inflation based on the Wholesale Price Index dropped to 3.57% in September from 3.74% in August, retail inflation calculated by the Consumer Price Index fell to 4.31% in September from 5.05% in August. Analysts had expected retail inflation to fall as the prospects of a bumper agricultural harvest had risen because of a good monsoon in the country.