Quote on RBI Monetary Policy Committee Announcement by Robin Arya, smallcase Manager and Founder, GoalFi
Below the Quote on RBI Monetary Policy Committee Announcement by Robin Arya, smallcase Manager and Founder, GoalFi
“The RBI Monetary Policy Committee (MPC) announced its decision to maintain the repo rate at 6.5%, emphasizing the need to balance inflation control and growth. The MPC’s statement highlighted a revised FY25 inflation forecast of 4.8% (up from 4.5%), driven by elevated food prices, particularly vegetables, which surged 42% year-on-year in October. Retail inflation in October reached 6.21%, breaching the central bank’s target range.
To address liquidity concerns, the MPC announced a 50 basis points (bps) reduction in the Cash Reserve Ratio (CRR), releasing ?1.16 lakh crore into the banking system. This move aims to support credit growth while maintaining a neutral monetary stance. The MPC’s decision reflects a delicate balancing act. By tackling inflationary pressures without cutting the repo rate, the RBI signals a cautious yet supportive stance for growth. Liquidity measures like the CRR cut will provide a lifeline for banks to drive lending. Banks, NBFCs, real estate, auto, consumer durables, and infrastructure sectors stand to gain directly from the RBI’s accommodative measures and liquidity infusion. Investors may consider these sectors for potential growth opportunities in the near term.”
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