Growth outlook for FY26 remains cautious. Heightened uncertainty on global trade prospects could depress global investment and consumption demand. Fortunately, domestic growth drivers are providing a silver lining. Domestic consumption is likely to benefit from (i) a brighter prospect for south-west monsoon, (ii) anticipated moderation in inflation, (iii) ongoing policy accommodation provided by the RBI, and budgetary support in the form of income tax relief and continued thrust on public capex. With ~50 bps moderation in global growth in 2025, India’s FY26 GDP growth could potentially see a 20-25 bps of downside. We retain our FY26 GDP growth at 6.4%. The average CPI inflation recorded in FY25 turned out to be 4.6%, the lowest in the post COVID phase. We project CPI inflation to ease towards 3.8% in FY26, the lowest in 7 years on supported by a ~11% increase in summer crop sowing and a likely healthy kharif outturn later in the year. Although core inflation has inched up in recent months, it could get soon get capped by the ranged commodity price environment. The bond market witnessed two noteworthy developments during May-25. The 10Y sovereign spread with respect to the US dropped to its lowest since 2004 while the RBI transferred a record high dividend to the GoI. We maintain our call of the MPC opting for a 25 bps rate cut in Jun-25 policy review, followed by another 25 bps rate cut in Aug-25 policy review. A record high dividend from the RBI will boost liquidity surplus, which is expected to stay around 2.3% NDTL during Q2 FY25, before moderating towards 1.5% in Q4 FY25. We maintain our call of continued moderation in the 10Y g-sec yield, drifting lower to 6.00% by Q4 FY25 vs. the current level of 6.26%. INR has stabilized after witnessing sharp depreciation pressures in early part of 2025  in the backdrop of weakness in the USD. The USD sentiment appears to be in a state of flux with its conventional safe haven status facing challenges. We maintain our call of moderate depreciation towards 89.50 by Q4 FY25 as past episodes of global slowdown has generally manifested in a weaker rupee