Quote on RBI MPC by Vipul Bhowar, Senior Director - Head of Equities, Waterfield Advisors
Below the Quote on RBI MPC by Vipul Bhowar, Senior Director - Head of Equities, Waterfield Advisors
"The Reserve Bank of India (RBI) has prudently reduced the repo rate by 25 basis points, with considerable backing from the Monetary Policy Committee (MPC). Looking forward, the GDP forecast for FY 2025-26 has been optimistically revised upward to 7.3% from 6.8%, and the CPI inflation estimate has been lowered to 2%, representing a reduction of 170 basis points from June's projections.
Furthermore, the RBI announced positive developments, including Rs 1 trillion in scheduled Open Market Operations (OMOs) for December 2025, along with a USD-INR swap of USD 5 billion scheduled for December 16, 2025. They also emphasised a significant easing in headline inflation and anticipate a modest slowdown in economic growth, while prioritising effective monetary transmission.
The initiative to augment durable liquidity is highly beneficial, and bond yields are likely to decrease slightly from current levels. However, persistent shortfalls in tax revenue may exert some upward pressure on bond yields. The USD-INR swap, which enhances liquidity, is also expected to support the currency's appreciation. Notwithstanding, substantial changes are likely to occur once there is a clearer understanding of the US-India trade agreement."
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