Key Highlights
- For fixed income investors, this creates a more constructive environment than what has prevailed over the past few quarters.
- The Monetary Policy Committee’s 25-basis-point cut in the repo rate was broadly anticipated, but the implications run deeper.
- The tone of the policy suggests that inflation is no longer constraining the RBI in the way it did over the past year.
- Headline inflation has softened to unusually low levels, and core inflation—excluding the impact of precious metals—is stabilising around more comfortable bands.
- Importantly, nearly four-fifths of the CPI basket is now exhibiting inflation below 4%, underscoring that this is not merely a transient correction but a broad-based softening in pricing behaviour.
