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Below View On RBI Monetary policy from Anita Rangan – Economist, Equirus

"RBI delivered a 35 bp repo rate hike maintaining its “withdrawal of accommodation” stance. While the policy rate is in-line with expectations, overall, the tone and read of the policy is dovish. Notably, RBI has reduced its FY23 growth forecasts to 6.8% (from 7%) while maintaining its inflation expectations at 6.7% for the year. In their outlook statement, RBI clearly notes that while growth impulses are resilient, it is the inflation which requires a watch. However, RBI’s inflation estimates for FY24 (Q1 & Q2) are 5% and 5.4% respectively. With the message that the first focus of the MPC is to bring down inflation below 6% and then towards a medium-term goal of 4%, the guidance seems that RBI is now comfortable with the inflation trajectory and growth also needs attention. Furthermore, RBI also notes that liquidity could head towards more tightness with the statement of “market participants should wean from surplus liquidity” reaffirming the view. The policy has a 5 to 1 vote indicating a 1-member dissent (perhaps asking for pause) while the stance has a 4 to 2 vote (perhaps with 2 members indicating move to neutral). Overall, policy has a dovish tilt and with the next policy after the budget, RBI will likely pause before ensuring that transmission of current policy rates is complete"

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