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Below the Perspective on RBI MPC Announcement by Pankaj Singh, Investment Manager on smallcase and Founder and Principal Researcher- SmartWealth.ai

Decisions:

1. Rates Held Steady: The Monetary Policy Committee (MPC) maintained the repo rate at 5.50% for the fourth consecutive meeting, signaling a commitment to stability amidst global volatility.

2. Neutral Stance Maintained: The RBI retained its 'Neutral' policy stance, preserving flexibility to act if economic conditions shift in the future.

3. Optimism on Growth: FY26 GDP growth estimate revised significantly higher to 6.8% from 6.5%, reflecting underlying strength and domestic resilience.

Rationale

1. Inflation Sobering: The rationalization of GST is already showing a positive impact, expected to have a sobering impact on inflation while stimulating consumption.

2. Cautious Outlook: Despite domestic strength, the MPC remains cautious, noting the outlook is clouded amidst global headwinds, trade uncertainties, and policy uncertainty.

3. Addressing External Factors: The Committee is actively factoring in the potential impact of external risks, including global trade tariffs and US policy changes like the H-1B visa fee hike.

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