This is after a significant 100-based point reduction in June 2025 and a reduction in the Kas Reserve ratio (CRR) to 3% by the end of 2025, movements aimed at stimulating liquidity and supporting growth.
Cautious attitude despite earlier relaxation
Naval Kagalwala, COO & Product Head at Shriram Wealth Ltd. said that with the inflation that is expected to be tailored to the 4% objective of the RBI in the short term – but it is expected to rise to 4.9% in the quarter of April -Juni 2026 – the scope for further
Reserve Bank of India maintains the REP rate at 5.50% in August 2025. This decision follows earlier rate reductions and CRR reduction. Experts suggest that they focus on bonds with highly valued bonds with a duration of 2-4 years. A possible rate reduction can occur in October 2025. Investors must consider fixed fixed -income strategies for moderate duration. Worldwide economic factors and Federal Reserve policy will influence future decisions.
“While the inflation is expected to be in Line with RBIs 4% Target for Now, the expected 4.4% Terminal Rate and a forecast inflation or 4.9% in the April – June 2026 Quarter Reduce the Possibility of Further Rate Cuts. Continue to outperform due to a mix of liquidity and good spreads fish-à-fish g-secs, “he said.
“We recommend investors to look at funds investing in high-rated bonds that keep the duration of 2 to 4 years. This includes categories such as corporate bonding funds, bank and PSU funds, short duration and target group funds,” Kagalwala explained.
Long -term break, selective long -term opportunities
Umesh Sharma, CIO debt at the investment fund of the Wealth Company, said that the MPC will be set for a long-term break, although a modest 25-based-point reduction will remain on the table by the end of the year. “Investors can engage in moderate duration strategies with a fixed income and selectively explore opportunities for long-term duration, for their risk appetite,” Sharma proposes.
October reduction possible, FED policy in Focus
Hitesh Jain, strategist at YES Securities (India) Ltd., is of the opinion that the RBI could deliver a calibrated 25-based point reduction in the policy meeting of October 2025, with reference to an uneven economic recovery and continuous trade tensions.
“If the growth falls short at the FY26 -BBP -target white of the RBI, the chance of two extra tariff reductions can rise meaningfully. Furthermore, the American Federal Reserve can also give the RBI more room to act without causing capital outlets,” Jain noted.
What should investors do?
The consensus is clear to fixed-income investors: focus on quality, moderate-duration strategies, while the coming global and domestic triggers keep a close eye on.
The current environment is in favor of positioning in the short to the end of the curve, with tactical movements in the long side for people with a higher risk tolerance.
((Indemnification: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)
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