RBI published the MPC minutes of the scheduled policy review on Feb 8th, that saw status quo on rates, with repo rate at 6.50%, providing rationale for the policy decision

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Feb 23, 2024

QuantEco Research || MPC Minutes - The divide of patience

At a broader level there was consensus on the following: (i) comfort on inflation, (ii) need to be vigilant on inflation, (iii) resilience in growth, and (iv) supportive role played by fiscal policy. Having said so, there seems to be some divergence in opinion between internal and external MPC members with respect to the need for calibration of nominal policy rate assuming the lower projected inflation trajectory for FY25.

With growth showing resilience, it perhaps makes sense to err on the side of caution and use the latitude to sustainably anchor inflation. As suchwe continue to maintain our call for an extended pause in repo rate action, until H1 FY25. With greater clarity on inflation emerging thereafter, this will likely be followed by upto 75 bps cumulative rate cut in H2 FY25.