Gold prices pare gains after hitting new high on rate cut bets, tariff uncertainty
Investing.com - Bank of America analysts believe the Reserve Bank of India will likely maintain current interest rates in the near term following strong GDP data released today.
The higher-than-expected GDP print has effectively eliminated the possibility of a rate cut at the October Monetary Policy Committee meeting, despite being anchored on a low deflator of just 0.9% year-over-year, according to BofA’s analysis.
Fixed income markets sold off following the GDP announcement, which BofA interprets as a sign that markets are no longer anticipating immediate policy changes from the RBI.
The research firm notes that recent policy developments, including GST tax cuts announced approximately two weeks ago, suggest an activist fiscal approach that further reduces the urgency for monetary easing, though BofA does not expect the RBI to adopt a hawkish stance given nominal economic growth remains below 10% year-over-year.
BofA maintains that risks still tilt toward an eventual rate cut, particularly if economic growth slows due to trade tariff impacts or if inflation remains subdued, with the firm emphasizing that growth data continues to be the primary driver of RBI policy decisions while inflation currently serves as a secondary consideration.
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