Analysts at Brown Brothers Harriman (BBH) highlight that the Reserve Bank of India (RBI) has paused its easing cycle, keeping the policy rate at 5.25%. This decision follows a cumulative 125bps reduction throughout 2025. Governor Sanjay Malhotra confirmed a “neutral” stance, indicating that rates will likely remain steady for the next 9 to 12 months, despite market swaps pricing in potential hikes.+1
The Rupee has recently lagged behind other Emerging Market (EM) currencies, largely due to the RBI’s resistance to hawkish market expectations. However, the USD/INR pair is expected to cool off following the announcement of a significant US-India trade deal, which is set to reverse the gains seen during the August trade-tension peak
