The RBI’s MPC minutes of the policy review on Jun 7th, displayed divergence between the doves (2 out of 6) and the status-quoists (4 out of 6) on the perception of anticipated growth conditions.

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Jun 21, 2024

QuantEco Research || MPC Minutes - Divided by growth

The RBI published the MPC minutes of the scheduled policy review on Jun 7th, that saw status quo on rates, with repo rate at 6.50%. At a broader level there was consensus on the following: (i) comfort on inflation, (ii) importance of a good monsoon, and (iii) resilience in global growth. The Committee displayed divergence between the doves (2 out of 6) and the status-quoists (4 out of 6) on the perception of anticipated growth conditions. While the doves believe it is prudent to avoid future growth sacrifices by proactively finetuning the nominal policy rate downwards, the status-quoists prefer to use the latitude provided by the underlying strength in growth to continue focusing on aligning inflation with the 4% target on a durable basis.

We continue to expect the MPC to maintain its anti-inflation posture in the next review in Aug-24. We expect rate easing cycle beginning from Oct-24, albeit a shallow one. We foresee 75 bps of cumulative space for monetary easing in this cycle, out of which, 50 bps could be delivered in H2 FY25.