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Below the Reaction Comment on RBI Monetary Policy from Naval Kagalwala, COO & Head of Products, Shriram Wealth Ltd

“For the fourth consecutive time, the RBI MPC held the repo rate steady at 5.25%, in line with the expectations. The stance was neutral and the overall tone of the policy was balanced, with resilience in domestic growth conditions and comfort around inflation outlook noted. CPI inflation is expected to peak in Q3 before easing thereafter; importantly, the MPC characterized this uptick as supply-driven rather than broad-based - not always warranting a monetary policy response. The CPI inflation for FY27 is now seen at 5% (10 bps lower than previous forecast) and real GDP growth revised upwards to 6.7%. The MPC retained its language on remaining vigilant and resolute in aligning inflation with target.

G-sec yields edged lower today morning, though this was not sustained on profit booking. The policy statement signals limited urgency for near-term rate action. We stay constructive on the near end of the curve, given ongoing global uncertainty, and crude oil volatility.”

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