RBI Policy Expectations: According to market experts, this time RBI’s monetary policy may focus more on managing liquidity rather than changing interest rates. He believes that with inflation under control and growth stable, there is less need for immediate action on interest rates.
In a monetary policy poll, about 90% people expected that there would be no change in interest rates in the last monetary policy of this financial year (2026) and the first policy of 2026, while only a few, i.e. 10% people believed that the repo rate could be cut by 25 basis points.
Did India-US trade deal reduce rate cut expectations further?
The market believes that this time there is less scope for cutting the repo rate. Expectations of policy interest rate cut, which were already low, have further reduced after the finalization of the trade deal between India and America. This agreement is being considered to reduce the pressure on RBI to provide short-term relief.
Expectations from RBI policy: What can be announced?
95% of those polled expected no change in the repo rate, while about 70% believed there would be no change throughout the year, and the rest expected another rate cut this year. At this time no one expected a rate increase.
The market’s focus is on liquidity. Despite more open market operations (OMO) this year, bond yields remain high. Market experts expect the RBI to support liquidity through measures such as additional OMO purchases, long-term variable rate repo (VRR), operation twist, or reduction in the cash reserve ratio (CRR). This can help reduce yields and ease funding conditions.
