Core Viewpoint - The Reserve Bank of India (RBI) is expected to maintain the repo rate unchanged due to rising bond yields, currency volatility, and global uncertainties, despite previous policy easing [1][11]. Economic Conditions - Several macroeconomic pressures are limiting the scope for fresh rate cuts, with government bond yields remaining firm in recent weeks [2][3]. - The effectiveness of Open Market Operations (OMOs) may be impacted by the type of securities selected, potentially slowing the transmission of monetary policy [3]. Trade Developments - The finalization of the EU-India and US-India trade deals has led to a significant reduction in tariffs on Indian goods from 50% to 18%, enhancing export competitiveness and trade prospects [5]. - This reduction in tariffs could support growth in manufacturing and goods exports in the coming months [6]. Global Risks - The global economic environment remains unstable, with the Geo-Economics Stress Index indicating that heightened uncertainty may lead to economic stress after a lag of three to four months [7]. - Recent recovery in metal prices could complicate the inflation outlook [7]. Currency Volatility - The Indian rupee has experienced volatility, fluctuating between 89 and 92 against the US dollar, and has weakened by 5.8% since early April due to US tariff hikes [8]. - The rupee gained over Re 1 following the India-US trade deal, providing some relief, but such fluctuations may make the RBI cautious about aggressive policy actions [8]. Inflation Outlook - New Consumer Price Index (CPI) weightings could raise overall inflation readings by 20-30 basis points, but high food inflation may result in lower figures during certain months [9]. - These mixed inflation signals complicate the policy direction, reinforcing a cautious approach [9].