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Below the Quote on Reaction  on today`s RBI Monetary Policy by Ms. Anitha Rangan, Economist, Equirus

Status Quo for Seventh Time in a Row – Growth gives the elbow room for pause
RBI in its 2nd monetary policy for FY25, maintained policy rate at 6.5% as expected and maintaining withdrawal of accommodation. The key takeaway is a) shift in voting pattern from 5-1 to 4-2 (Dr. Ashima Goyal and Prof. Jayant Varma) are likely the dissenters b) Upwards revision in growth for FY25 to 7.2% from 7.0% while keeping inflation unchanged at 4.5% for the year. Overall, the key reason for maintaining policy rate is the uncertainty on the outlook of domestic inflation led by the food side. According to RBI while core inflation is encouraging and at the lowest level in the current series, it is the food inflation that is playing spoilt sport, requiring vigilance. In addition, crude outlook remains uncertain.  A reference was also made that external factors are watched for, to see the impact on domestic inflation. Overall,  Indian economy is at an inflextion point with inflation on right track but work to be done. The watch is from global side with global last mile inflation remaining arduous and geo-political risks. For Rbi as we have reiterated earlier growth remaining firm, monetary policy has elbow room to focus on price stability.  The growth revision only reiterates that RBI is willing to wait and watch – RBI can watch for longer. RBI has the trinity of patience, perseverance and poise to support the economy!.

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