Global uncertainty adds to downside risks. India’s GDP growth is seen to have a strong correlation with global economic growth, with the strength of the relationship having increased in the recent decades. We maintain our domestic FY26 GDP growth to 6.4% (recently revised lower and attach downside risks to the call. We expect CPI inflation to ease to 4.1% in FY26  from 4.6% in FY25. With rabi crop in line with expectations and the IMD forecasts of Southwest monsoon “Above Normal” , in conjunction with softening of global crude oil prices, amidst expected slowdown in global growth in 2025 could prove to be positive for domestic inflation. In addition, downside risks to domestic growth as well as possibility of cheaper imports from China both may turn out to be deflationary for core inflation. There appears to be a push towards hastening the monetary policy transmission as validated by the surprise announcement of OMO purchase for May-25 by the RBI. With the RBI projecting alignment of CPI inflation with its target in FY26, we maintain our call of another 50 bps cumulative rate easing by Aug-25. Between Dec-24 and May-25, the RBI will cumulatively infuse Rs 8.6 tn of durable liquidity via CRR cut, OMO purchases, and buy-sell FX swaps. We expect core liquidity surplus to average ~2% of NDTL in FY26 and expect 10Y g-sec yield to drift lower towards 6.00% by Mar-26. INR in recent days has shown bouts of strength with the currency now reversing its ‘reciprocal tariff’ shock. We expect FY26 CAD and BoP surplus at 0.8% of GDP and USD 10 bn for now and will review the same as clarity emerges on India-US BTA. INR overvaluation levels have dropped to reasonable levels (estimated at ~4% as of Apr-25) and no longer give an impression of being stretched. Considering the known-unknown geopolitical and geoeconomic risks, we maintain our USDINR call of 89.5 before end FY26