In line with expectations, the RBI maintained status quo on monetary policy rate at 6.50% along with the stance continuing to focus on “withdrawal of accommodation”.
Download ReportQuantEco Research || RBI Policy - Steady for longer
In line with expectations, the RBI maintained status quo on monetary policy rate along with the stance. As such, repo rate remains unchanged at 6.50% with policy stance continuing to focus on “withdrawal of accommodation”. The central bank upped its FY24 GDP growth forecast to 7.0% from 6.5% earlier, while it retained its CPI inflation forecast at 5.4%. With immediate global anxieties ebbing, it comes as a relief that the RBI chose to downplay the previously communicated need for active curtailment of liquidity surplus via OMO sale. We continue to expect the central bank to maintain a prolonged pause on monetary policy rate until Aug-24 and opt for a pivot thereafter with visibility on the durability of the 4% inflation target getting better. We maintain our view of moderation in 10Y g-sec yield towards 7.00% levels by Mar-24, and further towards 6.50-6.75% by Mar-25.