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Below the Quote on RBI MPC Announcement by Mr. Siddharth Chaudhary, Head- Fixed Income, Bajaj Finserv AMC

“The RBI’s decision to hold rates reflects a careful balancing act. While headline inflation is temporarily subdued, core inflation remains sticky around 4%, and base effects are expected to reverse sharply by Q1 FY27. Additionally, with persistent noise around global tariffs, low net FDI and capital outflows, the INR could come under pressure. The RBI will need to maintain a reasonable interest rate differential with the fed funds rate to safeguard external stability. Further rate cuts look plausible only if inflation continues to surprise on the downside, and more importantly, if growth indicators—such as urban consumption, private capital expenditure, and external demand—show a significant fall. Globally, the Fed is expected to cut the policy rate, and if the uncertainty around tariffs also goes down, that will also create some space.”

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