The Reserve Bank of India’s decision to keep policy rates unchanged indicates that the rate cut cycle is nearing its end, with 5.25 percent likely to be the terminal rate heading into FY27, according to Sakshi Gupta, Principal Economist at HDFC Bank.
In a brief assessment, Gupta said the RBI appeared comfortable with recent growth momentum and potential gains from newly announced trade deals, a view reflected in the upward revision of GDP growth projections for the first half of FY27. She said this supports expectations of a 20 to 30 basis point upward revision in FY27 growth to around 6.9 percent.
At the same time, she cautioned that inflation risks remain tilted to the upside, with the RBI revising its inflation outlook for H1 FY27. Gupta flagged higher precious and base metal prices, rising input costs and possible weather-related disruptions as key factors that could push inflation estimates higher.
She added that while recent RBI measures are expected to improve system liquidity and support credit transmission, global yield pressures and supply-demand imbalances may keep bond yields elevated in the near term.
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