On expected lines, Monetary Policy Committee (MPC) maintained a status quo on the repo rates, a widely expected move and in concurrence with the neutral policy stance. RBI Governor Urjit Patel spoke about the recapitalisation of PSU banks, stating that governance reforms are necessary so as not to repeat the 'boom and bust cycle of lending'. Rising inflationary pressure, concerns of fiscal slippage and ongoing policy normalization by global central banks have straitjacketed RBI in terms of rate cut. Higher government spending and risk of deviation on the fiscal roadmap also pose inflationary risks. The hawkish tone set by the RBI along with global pressures dragged the market lower. A flat start is in the offing. Oil prices dropped on back of a rise in US refined product inventories. US markets closed lower due to uncertainty in US policy.
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