The Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously to maintain the policy repo rate at 5.25% and retained its “Neutral” stance. This decision reflects a strategic “wait-and-watch” approach, aimed at balancing robust domestic growth with evolving global macroeconomic conditions while emphasizing benign inflation and steady growth. The announcement follows a supportive domestic backdrop characterized by a growth-oriented Union Budget, easing inflationary pressures, and reduced external uncertainty following the landmark India–US trade agreement.

Moving forward, market trajectories may be shaped by evolving macroeconomic data and insights from the new series of GDP and CPI to chart the future course of policy. As the monetary cycle nears the end of its easing phase, a “lower-for-longer” rate environment is expected to prevail, with the pace and timing of policy normalization contingent upon the durability of the economic recovery. Furthermore, the RBI is expected to maintain an accommodative liquidity stance, bolstered by proactive liquidity-enhancing measures to support financial stability.

Amit Modani, Senior Fund Manager, Lead – Fixed Income, Shriram AMC.