RBI Monetary Policy : The Monetary Policy Committee`s decision to maintain the current policy rate and stance was on expected lines says Rajani Sinha, Chief Economist, CareEdge Ratings
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Below the Views on RBI Monetary Policy Rajani Sinha, Chief Economist, CareEdge Ratings
The Monetary Policy Committee’s decision to maintain the current policy rate and stance was on expected lines. Overall, the policy had a hawkish undertone to it. The governor sounded cautious about inflation even though the full-year inflation projection was unchanged. It is to be noted that the governor reiterated the RBI’s commitment to bring CPI inflation down to 4% target. The RBI kept the GDP growth projection for FY24 untouched as they await additional data points to comprehensively assess the evolving dynamics.
Furthermore, the RBI remains watchful of the liquidity conditions and wants to ensure no build-up of surplus liquidity. Hence the governor announced that RBI would consider open market operation (OMO) sale of government securities to mop up excess liquidity as required. We expect the RBI to start its rate-cutting journey from the second quarter of next fiscal year as inflation edges closer to 4% target.
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