The MPC kept policy rates unchanged, albeit opening the door wider for future rate cuts. This was indicated by inflation projections, which were cut sharply, with the outlook benign on cold food prices. Growth impetus in H1 drove up the projection of real GDP for FY26, even as alertness is being maintained towards possible slowdown in H2, as the might of global headwinds could overpower domestic impulses. In any case, the ample fiscal headroom and manageable external situation offer hope. The policy also included significant announcements of banking sector reforms. The Report concludes with the house view on yields and direction of policy.
