The Reserve Bank of India is expected to maintain a prolonged pause on policy rate changes, according to ICICI Bank Global Markets analysis. With the RBI keeping the policy repo rate steady at 5.25 percent in February, the outlook suggests rates will remain on hold through 2026-27. Core inflation remains benign, reducing the likelihood of further rate cuts or hikes. The central bank's focus has shifted toward ensuring effective monetary transmission through liquidity management rather than rate adjustments. Growth projections have been revised upward by twenty basis points, reflecting optimistic economic indicators and recent trade agreements. While headline inflation is expected to stay near target levels, the RBI will prioritize using alternative tools to support transmission effectiveness as bond yields and deposit rates adjust to market conditions.
