NEW DELHI: The Reserve Bank of India (RBI) may further reduce interest rates following a temporary halt, as additional liquidity might be needed in the latter half of fiscal year 2025-26 (H2 FY26), according to a report “Ionic Wealth” from Angel One, quoted by ANI.The central bank recently lowered its FY26 inflation forecast to 3.7 per cent. The first quarter projection stands at 2.9 per cent, with April and May’s average inflation aligning closely with this estimate. “We reiterate our view that a) the RBI will likely ease more after a brief pause, and b) more liquidity injection will be required in H2,” the report said.India’s Consumer Price Index (CPI) inflation decreased to 2.82 per cent year-on-year in May 2025, lower than April 2025’s 3.16 per cent.Monthly inflation figures showed a reduction of 35 basis points. Core inflation registered a slight decrease at 4.28 per cent, down from the previous month’s 4.36 per cent.The report indicates that current inflation figures provide the RBI additional scope to boost economic growth, which remains a primary concern.While domestic inflation remains controlled, the report warns that external factors including geopolitical situations and trade agreements could affect future inflation patterns. “Some uncertainty lingers from imported inflation,” the report added.Food price moderation contributed significantly to lower inflation, with food inflation decreasing to 0.99 per cent in May from April’s 1.78 per cent.Vegetable prices declined sharply by 13.7 per cent year-on-year, whilst pulses decreased by 8.2 per cent year-on-year, partially due to base effect. Cereal price increases slowed to 4.7 per cent in May from April’s 5.4 per cent.The report credits improved supply conditions for the food price moderation, supported by robust rabi harvest and suitable kharif sowing conditions.