MPC minutes provide the rationale for a 25 bps rate cut in repo rate along with a shift in monetary policy stance to accommodative
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There were no palpable internal differences between the MPC members – the decision of lowering the policy rate along with a shift in policy stance to accommodative from neutral was completely unanimous. The common underlying thread of a projected alignment of inflation with its target in the backdrop of downside risks to growth appears to have united the MPC members in their economic assessment as well as their policy actions. Our FY26 growth and inflation projection of 6.4% and 4.1% is in line with RBI’s estimates of 6.5% and 4.0%, respectively. Having said, we acknowledge that the geoeconomic and geopolitical situation is in a state of flux and hence forecasts in such a scenario would carry fat tailed risks. On a net basis, with the emergence of downside risk to both growth and inflation, we expect the MPC to stick to the path of monetary easing and anticipate cumulative 50 bps of additional rate cuts over the next two policy reviews in Jun-25 and Aug-25.