Perspective on RBI MPC by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
Below the Perspective on RBI MPC by Ms. Rajani Sinha, Chief Economist, CareEdge Ratings
“In its latest monetary policy meeting, the Monetary Policy Committee (MPC) announced a 50-bps cut in the policy rate - exceeding expectations and effectively frontloading the rate reductions for the remainder of the year. The shift in policy stance from “accommodative” to “neutral” suggests limited room for further policy easing in the current cycle.In a complementary move, the RBI also announced a 100-bps reduction in the CRR, expected to inject approximately Rs 2.5 trillion in durable liquidity into the system. This measure should bolster credit growth and further facilitate smoother transmission of the policy rate cuts, thereby supporting overall economic growth. The governor’s tone remained broadly dovish, underlining the central bank’s intent to prioritise growth.
The RBI’s decision to keep growth projections unchanged for FY26 at 6.5% was on expected lines. Our forecast however remains slightly more conservative, projecting FY26 growth at 6.2% amidst global headwinds and policy uncertainties.
On the inflation front, the RBI revised its projection downward to 3.7%, indicating a significant moderation in inflationary pressures. However, we continue to maintain a higher inflation estimate of 4% for FY26, considering weather-related risks. There are already early reports of crop damages in parts of south India from early monsoon this year which can add to the CPI inflation in coming months. Looking ahead, we do not anticipate any further rate cuts from the RBI unless downside risks to growth materialize”.
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