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Beloe Quote on RBI MPC By Mr. Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance

“The RBI’s monetary policy committee unanimously decided to keep the repo rate unchanged at 6.50% while continuing to maintain “withdrawal of accommodation” stance as against market consensus of a 25 bps rate hike. However, the RBI governor also indicated that if necessary MPC will not hesitate to take further action, which means that it might be a temporary pause of the current rate hike cycle if inflation print especially core inflation remains elevated.

 The RBI governor emphasized on the emerging financial stability risks in advance economies. Due to which there are evolving downside risk to the inflation, leading to RBI revising downward its inflation projection at 5.2% vs 5.3% for FY24 earlier. The RBI has revised upwards India’s GDP forecast to 6.5% vs 6.4% earlier on account of resilience of India’s economic activity. After the policy announcement, the bond yields have softened. The RBI maintains that next policy action will depend on the evolving growth and inflation dynamics in India. We believe that we are at the end of the rate hike cycle in India.”

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