India Swap Rates Signal End of Interest Rate Cut Cycle as Growth Outlook Improves
Indian swap markets suggest the rate cut cycle has ended as growth outlooks firm. Analysts now favor steepener trades amid rising inflation expectations.
Insights:
Financial markets in India 
IN have effectively priced out the possibility of further interest rate cuts by the Reserve Bank of India, as shifts in overnight indexed swaps (OIS) signal a transition toward higher longer-tenor rates. This movement, observed as of February 11, 2026, comes amid growing expectations for firmer inflation and robust economic growth. The resulting market dynamics have anchored short-term rates and led to a meaningful steepening of the OIS curve, fundamentally changing interest-rate expectations and market positioning for the next 12 months.
IN have effectively priced out the possibility of further interest rate cuts by the Reserve Bank of India, as shifts in overnight indexed swaps (OIS) signal a transition toward higher longer-tenor rates. This movement, observed as of February 11, 2026, comes amid growing expectations for firmer inflation and robust economic growth. The resulting market dynamics have anchored short-term rates and led to a meaningful steepening of the OIS curve, fundamentally changing interest-rate expectations and market positioning for the next 12 months.This trend follows the Reserve Bank of India recently raising its near-term GDP growth and inflation forecasts. The market adjustment is particularly timely as it precedes the release of new inflation and growth data under a revised series later this month. The impact of these revised expectations has been clearly visible in the pricing of the 5-year OIS and the non-deliverable overnight index swap (NDOIS), instruments that are closely watched by market participants including those in the United States 
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