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Below is quote on Monetary Policy by Siddarth Bhamre, Research Head, Religare Broking Ltd.

RBI raising repo rate by another 50 bps was very much in line with market expectations but it’s the confidence of RBI in the economy which has been the highlight of monetary policy. Governor’s confidence that GDP growth rate for FY23 will remain at 7% comes from his statement, “the late recovery in kharif sowing, the comfortable reservoir levels, improvement in capacity utilization, buoyant bank credit expansion and government’s continued thrust on capital expenditure.”

Above statement continues to instil our belief that India may continue to outshine other economies during the challenging global scenario and despite the Governor mentioning the sharp rise in interest rates by FED as a third shock after COVID and Ukraine scenario. He also made an interesting comparison between June 2019 and the current state of policy. Inflation and interest rates numbers then and now indicate, despite MPCs stance being that of withdrawal its policy is still accommodative which leaves more room for further hike in interest rates with less impact on growth.

Lastly, Deputy Governor Mr. Michael Patra’s response to a question in the press conference where he stated, “soft-landing is for the developed economies, for India it’s a take-off” sums up everything. We believe RBI and Government are handling the economy far better than their major global counterparts.

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