Softer inflation trips rate hike forecasts, RBI hold more likely

Softer consumer inflation at 3.9% in April-June versus the RBI's forecast of 4.2% has prompted ANZ and Citi to withdraw their 25-basis-point August rate hike calls. Most institutions now expect the RBI to remain on hold through FY27 at the current policy rate of 5.25%, though Kotak Mahindra Bank continues to project a cumulative 50 bps hike in H2 FY27. The MPC's next review is scheduled for August 3-5, with the RBI's FY27 inflation projection standing at 5.1%.