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Equirus Capital Head of Fixed Income Vinay Pai on RBI Policy
This story was originally published at 14:22 IST on 6 August 2025
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MUMBAI - Vinay Pai, head of fixed income, Equirus Capital, said the following on the Reserve Bank of India's third bi-monthly monetary policy for 2025-26 (Apr-Mar) detailed on Wednesday:
After front-loading 50 basis point (rate cut) in June policy, the RBI held the rate at 5.50%, with focus on the monetary policy transmission. There has been reasonable progress with 39-basis point reduction in the overall lending rates on the outstanding loans and 71 bps on fresh loans. The key policy announcement was the projection 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 the RBI from further accommodation.
The RBI will continue to provide ample liquidity to ensure banks transmit rates faster and also enable the corporate bonds issuances pickup and provide impetus on growth. The GDP forecast at 6.5% is maintained for FY26. The other headwind stems from external risk associated with the global uncertainty due to tariff stands high impacting exports and putting pressure on the currency. We therefore, expect the markets likely to be range bound with an upward sloping yield curve. Further rates cuts will depend on global factors and changes 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. End
Compiled by Rizwan Ali
Filed by Subhojit Sarkar
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