Mr. Vineet Agrawal- Co-Founder of Jiraaf.
The RBI held the repo rate steady at 5.50% on August 6, maintaining a neutral stance with a hawkish tilt disappointing market hopes for a dovish signal. While the central bank revised headline inflation for FY26 down to 3.1% (from 3.7%), it also projected Q1FY27 inflation at 4.9%. With FY26 GDP growth unchanged at 6.5%, the policy pause could extend for 12–15 months, making any rate hike unlikely before 2027.
That said, markets are still pricing in a possible 25 bps cut in October, especially if the U.S. Fed begins its easing cycle in September and the impact of U.S. tariffs on Indian growth becomes clearer. A stable domestic rate environment, coupled with potential Fed cuts, could widen the India–U.S. yield spread, making Indian G-secs more attractive to FPIs.
For fixed-income investors, the setup remains constructive.”