The RBI raised the repo rate by 25-bps in line with our expectations. Furthermore, it maintained its stance of withdrawal of accommodation. We assess the central bank’s tone as still cautiously hawkish given the concerns around a persistently high level of core inflation and an unchanged policy stance. While we believe it likely that the RBI has reached the end of its current hiking cycle, it is possible that it may continue to hike rates especially if core inflation remains above 6% over the next few months. Inflation expectation for FY23 was revised down to 6.5%, while average inflation for FY24 is pegged at 5.3%. Growth is expected to slow to 6.4% in FY24, compared with an estimated 7% in the ongoing fiscal year.
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