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Monetary Policy Review
RBI kept repo rate unchanged at 5.15% given changed dynamics of inflation-growth output.
As per RBI, transmission of monetary policy has been full in money, corporate and debt market, in government securities mkt its partial while in credit markets, its picking up.
CPI inflation has been revised upwards to 5.1 from 4.7% earlier for H2FY20
Real GDP growth projections is revised downwards from 6.1% to 5% now
Outlook – With the surplus liquidity in the system, rates have already come down in market. Status-quo on repo rates is in a way positive for banks as they will not have to bring down their lending rates as per new repo rate linked loan pricing. Going forward, we see limited scope of repo rate reductions considering upward pressure on inflation.
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