A survey of bankers suggests India’s banks are set for robust non-food credit growth of about 11–13% in January–June 2026. Improving balance sheets and steady economic activity are expected to lift lending, with retail and SME segments driving most of the expansion. Industrial credit is projected to recover more gradually, while monetary policy is widely seen as likely to stay stable.
Department of Economic Affairs Secretary Ajay Seth said monetary and fiscal authorities are taking steps to moderate inflation despite domestic and global headwinds. He stressed that policy action is being calibrated to control price pressures while keeping growth momentum intact. Seth framed the approach as “whatever it takes,” signaling continued coordination to balance inflation containment with economic expansion.
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Indian bond yields fell about 0.15% on Wednesday, slipping to below the key 7% mark as investors drew comfort from a conditional ceasefire in West Asia. The move also followed the Reserve Bank of India holding its policy rate steady, reinforcing expectations that monetary policy would remain unchanged for now.
Even with RBI inflation estimates looking higher, the central message is that rates may stay put. Benign core inflation, a rebound toward double-digit nominal GDP in FY27, and incentives for private capacity building suggest rate action is unlikely to resume soon. The stance points toward a prolonged pause rather than an immediate hike cycle, per the latest analysis.
Indian sovereign bond yields fell sharply on Monday, with the 10-year benchmark retreating 9 bps. Traders linked the move to reports of possible de-escalation in West Asia and rising hopes of a US-Iran peace framework. Sentiment also improved after a lower-than-expected state borrowing plan for April-June, leaving markets focused on the central bank’s upcoming policy rate decision.
RBI governor Sanjay Malhotra said the central bank’s currency forward curbs are temporary and do not signal any structural policy shift. He stressed the RBI remains committed to developing and deepening FX markets and to the internationalisation of the rupee, suggesting the current restrictions will eventually ease as those goals progress.
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Retail headline inflation has jumped past the 4% target set by India’s Monetary Policy Committee, with CPI rising at its fastest pace since June last year. The MPC aims to keep inflation within a 4–6% band, but an ET View note warns CPI could remain elevated due to statistical factors, complicating the path back to target.
The RBI appears set to make its first monetary policy stance shift since April 2022, signaling a potential change in how it steers interest rates. While the exact direction will be confirmed in the upcoming policy decisions, market expectations are already reacting to the central bank’s latest signals about inflation control and growth support.
In a sharp message, the RBI argued that weak growth can’t be blamed on monetary policy alone. It pointed to its decision to avoid cutting rates by 35 bps or more, signaling that liquidity availability is not the binding constraint on growth. The stance seeks to limit the idea that more monetary easing would automatically translate into stronger economic performance.
The latest RBI rate move is being read through an old playbook borrowed from the Fed and the BoJ. It appears dovish in tone, cautious in messaging, yet may be acting hawkish through how bond yields and liquidity react. In today’s low-inflation setting, central banks are using subtle signals to manage market expectations while avoiding renewed price pressures.
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RBI Deputy Governor Poonam Gupta said the central bank is in a “wait and watch” mode on inflation, emphasizing that there is currently no clear evidence of second-round effects. With global headwinds and geopolitical tensions ongoing, the RBI remains optimistic about India’s growth, balancing price stability with support for economic expansion through careful monitoring of external risks.
RBI’s monetary policy measures, including ECLGS, helped revive lending momentum for MSMEs. Credit to industry rebounded to 6.5% in February 2022 from just 1.0% a year earlier, supported by stronger flows to micro and small businesses and improving conditions in large industry. The turnaround is credited to policy-linked credit interventions.
RBI Governor Shaktikanta Das says the ongoing war has driven inflation far beyond national borders, effectively globalising price pressures. He noted that countries are being hit simultaneously as disruptions ripple through trade, energy, and supply chains. The warning underscores the challenge for policymakers to control inflation when shocks originate elsewhere.
The RBI’s latest rate cut has moved the conversation away from claims that the easing cycle is already over. Instead, the central bank appears to be putting speculation to rest, suggesting room for further policy action depending on incoming data and inflation trends. Markets now face a refreshed outlook on borrowing costs and the timing of future rate decisions.
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The Reserve Bank of India kept its key policy rate unchanged at 6.5%, matching market expectations. With economic growth remaining resilient, the RBI said it can keep its focus on bringing inflation toward its medium-term target of 4%. The last rate move was in February 2023, when the policy rate was raised to 6.5%.
Indian government bonds rose on Monday as traders priced in possible RBI bond purchases and welcomed a lower-than-expected state borrowing plan. After a stretch of yield increases, rates eased, lifting sentiment across the market. Investors now await the Reserve Bank of India’s monetary policy decision, with expectations that interest rates will stay unchanged.
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