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Below is View on RBI Monetary Policy by Mr. Amar Ambani, Senior President and Head of Institutional Equities, YES Securities.

“Quite expectedly, RBI delivered a 35bps rate hike, though the decision was not unanimous. RBI justified the rate hike, citing that although headline inflation seems to have peaked, food inflation remains sticky. RBI indicated a further calibrated rate hike, as headline inflation will remain above the target of 6% till Q4 FY23. This implies a 25bps rate hike in February 2023. RBI emphasized on withdrawal of liquidity, but at the same time supporting growth. Policy stance remains accommodative. On projections, GDP growth for FY23 is marginally lowered to 6.8% from the initial estimate of 7%. On Inflation, the CPI forecast for FY23 is retained at 6.7%, while the H1 FY24 inflation average is seen as much lower at 5.2%.

Given that RBI is emphasising on containing inflation below the target rate and projections stating inflation to remain above 6% till March 2023, this implies that RBI will likely deliver 25bps hike in February 2023.

Terminal rate will be 6.5% as inflation is projected to average 5.2% in H2 FY24, implying no need for rate hikes at April Policy meeting”

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