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Below the Comments on the RBI MPC by Mr. Vinay Pai, Head of Fixed Income, Equirus Capital 

After front loading 50 basis point in June  policy,  RBI held the  rate at 5.50% rate withf ocus has been on monetary policy transmission there has been reasonable progress with  39 bps reduction in overall lending rates on the outstanding loans and 71 bps on  fresh loans. The key policy announcement was the expectation of a strong decline in FY26 inflation to 3.1% (from 3.7%) led by Q2 and Q3, while a return to above 4% inflation  by Q4 and further to 4.9% by Q1Fy27 has kept RBI from further accommodation.

 RBI will continue to provide ample liquidity to ensure that banks transmit rates  faster, and also enable the corporate bonds issuances pick up and provide impetus on growth,  The GDP forecast at 6.5% is maintained for FY 26. The other headwind stems from external risk associated with the global uncertainty linked to tariff stands high which can impact the exports and impact pressure on currency. We therefore expect the markets likely to be in range bound with a upward sloping yield curve, further rate cuts will depend on global factors and change in growth outlook. For now, a closure on tariff negotiations will be the key to calm the currency markets and stem outflows especially in the debt segment.

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