Dahua Bank: India's steady GDP growth reduces the possibility of a rate cut in December.

The research team of Dahua Bank believes that the strong growth in the second quarter of India reduces the possibility of a rate cut in December. Inflation provides sufficient room for another 25 basis point rate cut, but Jester Koh of Dahua Bank believes there is no urgency to do so. The Reserve Bank of India may be more inclined to maintain policy space, and with support from tax reforms, the strong momentum of GDP may continue into the third quarter. Comments from the Indian Minister of Commerce also indicate that a US-India trade agreement may be reached by the end of the year. Koh cautions that although the impact of tariffs seems minimal so far, the full impact may not have been fully realized. Dahua Bank has raised its growth forecast for India for the fiscal year 2026 from 6.9% to 7.3%. The bank expects the Reserve Bank of India to maintain interest rates in December - contrary to market expectations on average - but points out that the central bank governor has stated that recent data supports the case for easing policy.