The RBI published Monetary Policy Committee minutes of the scheduled meeting on Dec 6th, that saw status quo on repo rate along with the monetary policy stance
Download ReportQuantEco Research || MPC Minutes - It’s all about ‘sequencing’ and ‘timing’
At a broader level there was agreement on the near-term growth-inflation balance turning adverse, role of seasonal supply shocks in worsening food inflation, immediate need for addressing the emerging money market liquidity shortage, and a broad global trend towards easing of monetary policy. However, differences cropped up in the assessment of underlying risks to growth, suitability of monetary policy tool in addressing supply side inflation, and the need for preserving recent disinflationary gains, and policy choices for addressing the trilemma.
We believe that the RBI seems to be adopting a gradual approach with laying implicit focus on policy sequencing. It started by shifting its policy stance from ‘withdrawal of accommodation’ to ‘neutral’ in Oct-24. This was followed by an infusion of durable liquidity via a 50 bps cut in the CRR in Dec-24 policy review. We expect the sequence to be upheld and continue to expect a 25 bps cut in the repo rate in Feb-24 policy review