Even with headline CPI set to rise from recent lows, it is projected to stay comfortably within the RBI’s target band for the foreseeable future. We expect the RBI to maintain repo rate at current low levels. The RBI’s commitment to perform OMOs as and when needed also provides a supportive backstop. The India budget targeted a 4.3% of GDP fiscal deficit for FY27, with gross issuance of Rs. 17.2 tn. While higher gross issuance can put upward pressure on bond yields, the US India trade deal could improve investor sentiment toward India, especially if it is accompanied by reforms aimed at increasing economic productivity and improving the ease of doing business. This could lead to increased foreign investment in Indian bonds.