The report said the magnitude of rate cuts would depend on the trajectory of inflation, which is expected to reach 6 per cent 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.
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.