New Delhi, Aug 14
The Reserve Bank of India’s Monetary Policy Committee (MPC) could consider further policy rate cuts if upcoming GDP data falls short of expectations and the US Federal Reserve begins aggressive easing in response to a weaker labour market, a report said on Thursday.
Any additional room for easing could open up if growth underperforms and the US Fed cuts rates to counter labour market weakness, HSBC Mutual Fund said in its report.
The RBI's committee left the repo rate steady at 5.50 per cent and maintained a neutral stance after earlier cuts of totalling 100 basis points.
The report also pointed out that corporate bonds in the 2–4 year maturity segment are currently offering favourable spreads of 65–75 basis points over comparable Indian government bonds, and could see spread compression ahead.
With the easing cycle nearing its end, it sees an overweight position on such bonds to capture carry.
A potential US Fed rate cut from September could give the RBI more room to act, particularly with inflation projected to remain benign until the fourth quarter of FY26, the report stated.
The report expects the MPC to take a calibrated approach towards the end of calendar year 2025, with India’s growth momentum remaining the key focus.