Overview
- The Monetary Policy Committee unanimously cut the policy rate by 25 basis points to 5.25% and kept its stance neutral.
- The RBI lifted its FY26 GDP growth forecast to 7.3% and trimmed its inflation projection to 2%.
- To aid transmission, the central bank scheduled Rs 1 lakh crore of OMOs on December 11 and 18 and launched a USD/INR buy-sell swap of USD 5 billion for three years.
- Analysts expect equities to stay range-bound with limited near-term upside, with autos and real estate seen benefiting and banks facing net interest margin pressure.
- Some commentators say a 50 bps cut was warranted given very low inflation, US tariff headwinds and a rupee that recently breached 90 per dollar.