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Below are Views on Monetary Policy by Suvodeep Rakshit, Vice President & Senior Economist at Kotak Institutional Equities:-

“The announcements on policy rates, stance, and liquidity management was as per expected. The announcements on GSAP 1.0 and GSAP 2.0 are in line expectations too. Markets could be slightly disappointed with the last tranche of GSAP 1.0  including SDL within the Rs400 bn limit, especially, after the announcement of a possible Rs1.58 tn borrowing by center as back-to-back loans to the states. However, this would be a policy that is in line with market’s expectations. GDP growth estimate for FY2022 was revised down to 9.5%, again broadly in line with  consensus estimates. We expect GDP growth at 9%. Estimate for average inflation was marginally revised higher to 5.1%. We estimate average CPI inflation at 4.9%. It remains well within the RBI’s comfort levels given the growth concerns. Overall, policy decisions were as expected and we expect the RBI to remain steady with its policy rate, stance, and liquidity management over at least the next couple of policy meetings.”

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