“The MPC’s unanimous decision to keep the repo rate unchanged at 5.5% even while reducing the CPI inflation forecast to 3.1% for FY 26 from 3.7% earlier can be described as a ‘dowish pause.’ Downtrending inflating in the backdrop of good monsoon and Kharif sowing will keep inflation well anchored enabling the MPC to go for another rate cut in this rate cutting cycle. The RBI Governor’s view that “we are waiting for the transmission of front-loaded rate cut” is the right view under the present circumstances. This policy of dovish pause while continuing with the neutral policy stance is good for the banking and other rate sensitive sectors.”
