The further sharp drop in headline inflation in June has raised the prospect of another interest rate cut at the Reserve Bank of India’s (RBI’s) upcoming MPC meeting on Wednesday 6th August. But given the RBI’s bumper 50bp rate cut in June and clear signalling that the easing cycle was over, we suspect that the high bar for further rate cuts has not been cleared. We think the repo rate will stay on hold at 5.50% next week and well into 2026.
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