In line with our expectations, the RBI’s MPC reduced repo rate by 25 bps to 6.00% while shifting the monetary policy stance to ‘accommodative’ from ‘neutral’
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In line with our expectations, the RBI’s MPC reduced repo rate by 25 bps to 6.00% while shifting the monetary policy stance to ‘accommodative’ from ‘neutral’. The central bank revised lower its FY26 GDP growth and CPI inflation forecast by 20 bps each to 6.5% and 4.0%, respectively. The emergence of downside risk to both growth and inflation in a world marked by disruptive shifts in the global trade order is likely to keep the MPC members inclined towards incremental policy easing. We maintain our call of another 50 bps of cumulative rate cut spread equally over Jun-25 and Aug-25 policy reviews. From a g-sec market perspective, the shift in monetary policy stance is helpful as it enhances the visibility of future rate cuts. In addition, the RBI Governor’s reference to maintaining liquidity surplus in the region of 1% of NDTL is encouraging. We retain our recently revised 10Y g-sec yield call of 6.20% for end FY26.