The key policy repo rate could be cut by the Reserve Bank of India starting early 2024 once headline inflation eases towards the target of 4 per cent, S&P Global Ratings said.

However, it retained India’s GDP growth forecast at 6 per cent.

“In India, under the assumption of normal monsoons, we expect headline consumer inflation to soften to 5 per cent in fiscal 2024 from 6.7 per cent.

“Softer crude prices and tempering of demand will bring down fuel and core inflation, respectively,” the rating agency said.

Annual retail inflation cooled to a more than two-year low of 4.25 per cent in May as cost pressures on food eased. Inflation in May was within the RBI’s target band of 2-6 per cent for the third straight month.

“We see the fastest growth at about 6 per cent in India, Vietnam, and the Philippines,” S&P Global Ratings said in its quarterly economic update for Asia-Pacific.

“The medium-term growth outlook remains relatively solid.

“The Asian emerging market economies remain among the fastest growing ones in our global growth outlook through 2026,” said Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.

Fitch Ratings last week revised upwards its FY24 economic growth forecast for India to 6.3 per cent from 6 per cent it had predicted earlier.