Headline inflation in India fell to a near 26-year low in October. Although this probably marks the bottom, we now think it will average just 3.0% in 2026, from 3.4% previously. That will allow the RBI to reduce interest rates further and then keep policy accommodative throughout next year. Elsewhere, the BJP-led National Democratic Alliance appears to have secured a sweeping win in the Bihar state election. The focus of policymakers may now turn to securing a trade deal with the US, although the size of the election win may be seen as a validation of its refusal to open up the agriculture sector.
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