CareEdge Ratings has released its latest Debt & FX Market Update for August 2025. CPI inflation eased to 1.6% in July, with FY26’s average projected at 3.1%. However, inflationary pressures are expected to rise in the second half as the base effect fades. Liquidity conditions remain stable, and the upcoming CRR cut in September is likely to provide further relief. The Centre may face an annual fiscal impact of Rs 700–800 billion due to GST reforms. Meanwhile, India’s 10-year government security (GSec) yield climbed 26 basis points in the past month, reflecting the Monetary Policy Committee’s hawkish stance and concerns around GST-related borrowings. CareEdge does not anticipate further RBI rate cuts in the near term. However, if elevated US tariffs on India persist and growth risks intensify, the RBI may step in with accommodative support. Corporate bond issuances fell to Rs 0.7 lakh crore in July, marking a six-month low, though year-to-date issuances are still up 32% YoY. Foreign Portfolio Investor (FPI) outflows continued for the third consecutive month in August. The rupee depreciated 1.3% against the dollar over the past month, influenced by US tariff measures and sustained FPI outflows. Looking ahead, developments in the US-India trade deal will be a key factor to watch. Read more: Debt_FX_Market_Update_-_August_2025