Rate cuts off table as RBI MPC flags inflation risks, two dissent on stance - Business Standard

The Reserve Bank of India's Monetary Policy Committee has signaled that interest rate cuts are no longer on the table, citing inflation risks, and two members dissented on the policy stance. The transmission channel here runs through rate expectations: removing the prospect of easing pushes out the path of Indian policy rates, which tightens the rate differential assumptions that have supported rupee-denominated carry trades and reduces the appeal of duration in Indian government bonds. Indian rate-sensitive equities, particularly housing finance, autos, and consumer durables that depend on credit growth, are most exposed to a higher-for-longer repricing, while banks may see mixed effects from stable net interest margins offset by slower loan demand. The next concrete catalyst for traders is India's monthly CPI inflation release, where any upside surprise in food or core components would test whether the committee's hawkish tone reflects a durable shift or a temporary hold.

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