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RBI Monetary Policy Views by Mr. Hitesh Jain, Strategist- Institutional Equities Research Yes Securities India Limited

On the interest rate trajectory, we see RBI closely following the trails of global central banks. If the probability of an early interest rate cut by the Fed materializes, we think that the RBI will follow suit. Interest rate futures are pricing a 60% probability of a Fed rate cut as early as March 2024 and an 80% probability of a rate cut in May 2024. Optically, RBI may attribute domestic inflation as the major determinant of the policy rate, but we infer that the central bank is also largely influenced by the interest rate dynamics in the US and Europe given its wider impact on the currency, trade, and foreign capital flows. Given that there is a clear consensus of a reversal of the monetary policy action by the Fed and if it cuts interest rates in March, we fancy a rate cut by RBI in April, when compared with the consensus of a cut in Q2 FY25.”

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