New Delhi - The RBI is expected to lower policy rates by 50 basis points in 2015 with the first rate cut likely as early as February next year on the back of slowing inflation, global brokerage firm Morgan Stanley said.

The report said the magnitude of rate cuts would depend on the trajectory of inflation, which is expected to reach 6 percent level on a sustained basis by March 2015.

"In our base case, we expect inflation to reach the 6 per cent level on a sustained basis by March 2015 (same as the RBI's expectation). We therefore assume 50 basis points policy rate cuts in 2015 in our base case," Morgan Stanley said in a research note.

"We believe that the first rate cut is likely to be in February / March 2015," the report added.

In terms of magnitude of rate cuts, Morgan Stanley expects 50-100 basis points of policy rate cuts in 2015, depending on the inflation trajectory, which in turn will be dependent on the trend in commodity prices, fiscal deficit and rural wage growth.

The upside and downside risks to these forecasts would be influenced by two key factors: the pace of policy actions to revive productivity dynamic and the strength of external demand recovery, it said.

At the December 2 monetary policy review, RBI Governor Raghuram Rajan chose to hold rates, saying it is premature to go in for a cut at the moment, but held out hope of a cut if inflation falls.

On economic growth, the report said GDP growth on a quarterly basis is expected to accelerate from the current pace of 5.3 percent for the quarter ended September 30, to 7.3 percent in the March quarter of 2017. (PTI)