Recent reports regarding a potential agreement between the US and Iran, including discussions around a possible Memorandum of Understanding and the reopening of the Strait of Hormuz, have contributed to a decline in oil prices and a moderation in bond yields.

On the domestic front, inflation dynamics remain subject to multiple factors. The India Meteorological Department’s forecast of below-normal rainfall associated with El Niño conditions could influence food price trends, while developments in global energy markets and exchange rate movements may affect imported inflation. Domestic bond markets continue to monitor geopolitical developments in the Middle East, including the situation surrounding the Strait of Hormuz, given their potential implications for energy prices and inflation expectations.

Against this backdrop of evolving global and domestic macroeconomic conditions, market participants will be closely watching the upcoming RBI Monetary Policy Committee (MPC) meeting for signals on the policy outlook. The RBI’s updated growth and inflation projections for FY2026–27, due on June 5, are also expected to provide important guidance on the central bank’s assessment of the economic environment and future policy trajectory