IGI Logo

Below is perspective on RBI MPC Policy by Mr. Nikhil Gupta, Chief Economist at Motilal Oswal Financial Services Ltd.

RBI keeps policy rates unchanged

A hike in reverse repo rate on cards in Feb'22, but could be postponed to Apr'22 as well

 * As expected, RBI keeps all policy rates unchanged today (some section was expecting a hike in reverse repo). Further, the RBI maintains its FY22 real GDP growth/inflation projections at 9.5%/ 5.3%.

* Overall, there were no surprises in the policy today and it was broadly a non-event.

* Going forward, we fear that real GDP growth could be lower than the RBI projections, with inflation falling broadly in line. Along with the rising threat from the Omicron variant, *there is a possibility that a hike in reverse repo could be postponed further to April 2022.

* However, if growth turns out to be better than our expectations (or in line with/better than RBI projections) and Omicron threat doesn't materialize, a 15bps hike in reverse repo rate in Feb'22 cannot be ruled out. In any case, the Union Budget 2022-23 will also play an important role in the next MPC meet.

Above views are of the author and not of the website kindly read disclaimer