Chief Asia Economist at Morgan Stanley, Chetan Ahya said that the Reserve Bank of India may have room to cut interest rates, but it's unlikely to take an aggressive approach.

In an interview to CNBC-TV18, Ahya said, "Considering that we are not expecting a big dent to India's growth story, since growth conditions will still be reasonable, RBI should take up two more rate cuts," 

He further said, "The GDP numbers were a bit stronger, but if you look at it adjusted for the indirect tax effect, then the number was 6.8. So the underlying number was less robust than the headline number. But it’s definitely indicating that India is at least having a starting point before the tariff effect takes in, which is much stronger than everybody in the rest of the world as well."

Morgan Stanley expects a sharp global growth slowdown due to the tariffs. US growth is projected to decline from 2.5% in 2024 to 1% in 2025, while Asia could see a dip from 4.6% to 4.3%. India’s growth is expected to ease from 6.7% in calendar year 2024 to 6.2% in calendar 2025.

Ahya also shared his outlook on inflation, interest rates, bond yields, and currency trends.