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Below the Quote on RBI MPC by Mr. Ashwani Dhanawat, Executive Director & Chief Investment Officer, Shriram General Insurance Limited.

The MPC’s decision to maintain the repo rate at 5.5% with a neutral stance is a well-calibrated move, allowing the economy to absorb the impact of the cumulative 100 basis points rate cuts implemented since February 2025. This pause ensures that the ongoing monetary policy transmission continues to support credit growth while maintaining stability in the financial system. The decision aligns with the RBI’s cautious optimism, as domestic growth remains resilient, with the GDP growth projection for FY26 retained at 6.5%.

 The downward revision of the CPI inflation forecast to 3.1% for FY26, from the earlier 3.7%, is a significant positive. This benign inflation environment, driven by favourable monsoon conditions, healthy kharif sowing, and effective supply-side measures, creates a conducive setting for sustained consumer spending and investment.

 However, the RBI’s caution regarding a potential rise in inflation to 4.9% in FY27 underscores the need for vigilance. The MPC’s consumer-centric initiatives, like standardizing claim settlement for deceased customers’ bank accounts and lockers, enhance trust and efficiency, benefiting families and the insurance sector. The introduction of SIPs for treasury bills via the RBI Retail-Direct platform promotes financial inclusion. A sustainable CAD and strong forex reserves ensure external sector stability, supporting investor confidence crucial for insurance growth. The phased 100 bps CRR cut from September 2025 will boost liquidity. Overall, the RBI’s policy balances growth and risk, fostering sustainable progress.

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