In its June monetary policy meeting, the RBI kept the repo rate unchanged at 6.50% and retained its stance of “withdrawal of accommodation”. However, the MPC has witnessed a growing divergence of views, with two members voting for a 25-bps rate cut and a shift in stance to neutral. The tone of the meeting remained cautiously hawkish recognising the upside risks to inflation. The central bank revised its growth forecast slightly upward, while the inflation projection was left unchanged. Further, there was no change in the liquidity management communication – the bank will continue to conduct two-way operations to manage liquidity. Given strong growth expectations, and delayed Fed rate cuts, we expect that the rate cuts in India would not begin before September and that the scope for substantial rate cuts will be limited given that headline inflation is expected to accelerate again towards the end of the year.