19 MARCH 2026
How has India’s inflation profile changed? India has traditionally been associated with structurally high inflation and tight monetary policy. However, over the past decade CPI inflation (blue line) has trended steadily lower and now sits near levels typically seen in developed markets.
Why do lower inflation and rates matter? Declining inflation has allowed borrowing costs (red line) to fall (apart from a brief rebound during the 2021/22 global inflation scare), removing a major impediment to growth. Lower and more stable interest rates also reduce the likelihood of abrupt policy tightening that previously disrupted equity bull markets.
What are the broader implications? A more stable inflation environment suggests India may be transitioning from a volatile emerging market profile toward a more resilient macro framework – a change that could support longer and fewer interrupted equity cycles.
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