RBI MPC 2026: Rate cut or hold? Here's what JM Financial says

The Reserve Bank of India's Monetary Policy Committee (MPC) is scheduled to meet on Friday, with the ink drying on the historic India-US trade agreement and the Union Budget FY27 announcements.

According to brokerage firm JM Financial, the central bank is likely to hit the pause button, shifting gears from rate cuts to liquidity management.

JM Financial said that the concerns around growth fade in the wake of the long-pending India-US trade deal. With the trade agreement concluding and tariffs on Indian goods lowered to competitive levels of 18%, the economic engine is expected to be resilient, it said.

“we believe policy easing—purely from a macroeconomic standpoint—may not be
warranted at this juncture while the case for maintaining status quo remains strong,” the brokerage said.

The RBI has already front-loaded 125bps of rate cuts in this cycle to support growth. JM Financial said the bond markets appear to be detached from the RBI's policy actions since June 2025, as reflected by the widening wedge between the policy rate and benchmark yield.

The brokerage expects yields to harden towards 7%, considering the government’s higher-than-expected borrowing programme of Rs 17.2 lakh crore for FY27E. 

"The RBI will continue to use liquidity management as a primary tool to manage volatility in yields," it said. 

“Inflationary pressures are expected to gather momentum, fuelled by base effects, while growth is expected to be resilient as the overhang of the pending FTA with US is done away with,” JM Financial said.

“The appreciating bias in INR (90.3/USD) post-trade deal with the US will warrant lesser FX intervention,” it noted.

JM Financial expect a "prolonged pause". The case for maintaining status quo remains strong, the brokerage said.