The US Federal Reserve recently lowered its interest rate by 50 bps, indicating a proactive stance to sustain economic growth. In India, economic growth slowed in Q1 FY25 due to heatwaves and subdued government spending, but private consumption and investment remained resilient. The outlook, however, faces concern about signs of slowing urban consumption and weakening external demand. Headline inflation rose slightly but remained at a near five-year low in August. Given mixed economic activity and an improving inflation outlook amidst additional rate cuts by the US Fed, the RBI is likely to signal future policy changes, potentially by adopting a dovish tone at the next meeting. We believe the first rate cut will likely happen in December.