- 8 Feb 2024
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In today’s monetary policy meeting, the RBI kept the repo rate, unchanged at 6.50%. Furthermore, it retained the stance of “withdrawal of accommodation”. The tone of the meeting was still hawkish as reflected in the reiteration of the need for the monetary policy to remain actively disinflationary to bring the inflation down to a target of 4% and incomplete transmission of rate hikes. Further, the stance was de-linked from regular liquidity operations and is to be perceived in the context of policy rate outlook. There were downward revisions to inflation projections while the GDP projections for FY25 were nudged upwards. Given that inflation is expected to remain above 4% till Q2 FY25, we expect no rate cut in the first half of 2024. There is a possibility for the rate cuts to be delayed further if inflation does not move towards target on a durable basis, especially in the context of economic growth remaining strong.
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