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

As expected, RBI has maintained its pause on policy rates and keeping intact its withdrawal of accommodation. Alongside the growth and inflation estimates for FY25 have also been maintained at 7.0% and 4.5% respectively. Notably, this is despite stronger than expected advance estimates of GDP of 7.6% for FY24. The voting stance also remains unchanged at 5-1. Notably, RBI has a view that domestic growth momentum led by rural recovery, private capex and government investment will remain strong into the year, and inflation is also expected to remain moderated. However the key headline risk is coming from rising geo-politics which is also getting evidenced in rising crude prices. The impact on inflation from the above two factors warrant a watch and staying cautious on the policy. On liquidity, RBI is likely to continue with the current tools of VRR and VRRR to manage deficit and surplus in the system. Ahead of the bond inclusion, RBI is not doing anything different to change the dynamics of policy actions or liquidity management. In summary, RBI is not lowering the guard while inflation aligns to the target. Status quo for now!

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