Central bank’s rate cut sparks optimism across sectors; experts see room for more easing

Vikas Garg, Head of Fixed Income at Invesco Mutual Fund, said the RBI’s unanimous 25-basis-point policy rate cut reflects confidence in the benign inflation outlook despite mixed market signals. “RBI walks the talk with a unanimous 25 bps policy rate cut, supported by a benign inflation trajectory, even as the robust 2QFY26 GDP numbers and the INR at an all-time low against the Dollar created market doubts,” he noted.

He added that while the central bank maintained a neutral stance, it also reinforced a data-dependent approach. “Forward-looking inflation appears comfortable, with 2QFY26 projected at 4.0%, which could open up space for one more rate cut. However, the growth trajectory remains the key factor,” Garg said.

A major positive for markets, according to him, was the announcement of ₹1 lakh crore in G-Sec purchases and a USD 5 billion forex swap in December to ease liquidity pressures. “Interestingly, to support growth, RBI acted proactively to provide liquidity in December itself, even though tightening is expected only in 4QFY26. With this approach, we expect more OMO announcements and FX swaps going forward,” he added.

Garg described the policy as “dovish and market-supportive,” noting that it is expected to push yields lower.