The repo rate increase by 25bps to 6.5% is in sync with the broad market consensus view Says Mr Ajit Banerjee,Shriram Life Insurance
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Below View On RBI Monetary Policy By Mr Ajit Banerjee, CIO, Shriram Life Insurance
"The repo rate increase by 25bps to 6.5% is in sync with the broad market consensus view. However, what was probably considered slightly on unexpected line was RBI maintaining its withdrawal of accomodation stance to ensure inflation remains within target going forward, while also supporting growth. Therefore, this indicates that we cannot rule out at this stage any further rate hikes and there was a reference by the Governor to this effect.
Real GDP growth for FY 24 has been pegged at 6.4% assuming that India will have a normal and good monsoon season. Quarter wise the growth tapers down from 7.8% in Q1 FY 24 , 6.2% in Q2 , 6% in Q3 and 5.8% in Q4 perhaps keeping in mind the base effect and global headwinds blowing which can have some effect on India's GDP growth as well.
CPI inflation for FY 23 has been revised down to 6.5% from previous forecast of 6.7% and for FY 24 CPI inflation is targeted at 5.3% . Food inflation outlook will likely benefit by bumper rabi output while commodity prices may remain firm with world getting back to normal and activities restoring as year progresses.
Overall, the policy rates were largely on expected lines barring the continuance of the stance part."
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