Dailymirror.news,MUMBAI, February 6th,2026:Following the Reserve Bank of India’s (RBI) latest Monetary Policy Committee (MPC) meeting, HDFC Bank’s research team has indicated that the domestic rate cut cycle may be nearing its conclusion. The bank suggests a “terminal rate” of 5.25% as the central bank navigates a complex landscape of robust growth and lingering inflationary pressures.

The RBI maintained the status quo on policy rates, a move HDFC Bank analysts say was anticipated given the current economic momentum and potential gains from recent international trade agreements.

Upward Revision in Growth Forecasts
The central bank’s confidence in the Indian economy was evidenced by an upward revision of GDP growth projections for the first half of FY27.

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HDFC Bank is following suit, noting that recent trade deals could lead to a significant boost in their own estimates. The bank expects to revise its FY27 growth forecast of 6.9% upward by approximately 20 to 30 basis points.

Inflationary Clouds on the Horizon
Despite the growth optimism, the RBI raised its inflation outlook for early FY27, citing several “upside risks.” HDFC Bank identified multiple factors that could push prices higher:

Commodity Costs: Rising prices for both precious and base metals.

Input Pressures: Increasing costs for manufacturers and producers.

Environmental Risks: Potential weather-related disruptions affecting food supplies.

“Today’s communication confirms our view that this is likely the end of the rate cut cycle,” HDFC Bank stated, adding that the terminal repo rate will likely settle at 5.25% heading into the next fiscal year.

Liquidity and Bond Markets
On the matter of market liquidity, HDFC Bank expects conditions to remain favorable for the remainder of Q4 FY26, thanks to previous central bank interventions. Consequently, no further liquidity-specific announcements are expected in the near term.

However, the bank cautioned that bond yields could remain under upward pressure due to a combination of factors, including:

Global Yield Trends: Rising interest rates in international markets.

Supply-Demand Gaps: Ongoing mismatches in the domestic debt market.

Market Sentiment: Traders adjusting to the “end of cycle” narrative.