The Reserve Bank of India has delivered its most dovish policy in years—and markets are lapping it up. Not only did Governor Sanjay Malhotra lead the Monetary Policy Committee to cut the benchmark repo rate by 25 basis points to 6%, he also trimmed the growth and inflation forecasts and, most significantly, shifted its policy stance to “accommodative.” That move effectively takes rate hikes off the table. The only paths ahead are a cut or a pause.Bond traders were already entering the policy review with bullish expectations, but the RBI has surpassed even those. By delinking its guidance from the global rate cycle and disregarding the Federal Reserve’s stop-go approach, the central bank has made it clear that domestic conditions will drive its actions. That clarity alone is worth a rally.
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