Following the signing of a US–Iran MoU on Jun 17th, shipping traffic through the Strait of Hormuz has started to recover after a gap of nearly 3-1/2 months, and the wartime risk premium embedded in energy markets is visibly unwinding. Brent crude has corrected to a price range of USD 70-75 pb currently, from USD 124 pb at end-Apr-26 and USD 93 pb at end-May-26. Factoring in this softening and an eventual peace deal, we mark down our FY27 average Brent crude forecast to USD 80–85 pb (vs. USD 95 pb earlier), while watching the US–Iran negotiations closely. With the energy shock easing, India's growth-inflation mix improves slightly versus our earlier estimate. We now expect FY27 GDP growth at 6.4% (vs. 6.2% earlier), down from 7.7% in FY26, with the Middle East impact concentrated in Q1 FY27 and some spillover into Q2 FY27. The drag is corroborated by weaker high-frequency indicators — softer PMI manufacturing, fuel consumption and core industries — alongside a deterioration in producer margins as input costs outpace modest output-price gains. Amidst these moving parts, the bigger near-term risk has shifted to the monsoon. An El Nino-shadowed season — with cumulative rainfall running 42% below normal as of Jun 29th — threatens the agri/rural economy, with GVA crops at risk of a ~1% contraction and rural demand already softening. Urban consumption, squeezed by higher fuel and input costs and impending rate hikes, is unlikely to offset rural weakness this year. On inflation, we revise the FY27 CPI projection lower to 5.1% from 5.5% earlier to reflect the recent softening in crude prices. WPI inflation has firmed up and is projected to average 10% in FY27, well above CPI. With crude sliding and targeted policy measures in place, we now project the FY27 current account deficit at just 0.9% of GDP (down from our previous estimate of 1.8%), and — strikingly — expect the BoP to swing to a surplus of USD 70 bn (against our earlier estimate of a neutral BoP). We expect INR to strengthen towards 92 by Sep/Dec 2026 before gravitating to 95 by Mar-27, as the RBI absorbs the special FX inflows into reserves. On rates, we expect the MPC to begin a modest hike cycle, lifting the repo rate by 25–50 bps to 5.50–5.75% in H2 FY27. We see the 10Y benchmark yield at 6.75% by Sep-26 and 7.25% by Mar-27.