Report on RBI Monetary Policy by Mr. Siddarth Bhamre, Head - Institutional Research Asit C. Mehta Investment Interrmediates Limited
Below Report on RBI Monetary Policy by Mr. Siddarth Bhamre, Head - Institutional Research Asit C. Mehta Investment Interrmediates Limited
Overview Summary:
Economic Outlook
1. Upward Revision in GDP Growth
* FY26 GDP growth forecast increased to 7.3% from 6.8% earlier.
* Q2FY26 GDP growth is supported by festive demand and GST rationalization.
2. Downward Revision in Inflation
* FY26 inflation forecast lowered to 2.0%.
* Q2FY27 inflation expected at 4.0%, mainly due to declining food prices.
3. Liquidity Measures
RBI to conduct:
* OMO purchases of government securities worth Rs 1 lakh crore.USD/INR Buy-Sell swap of USD 5 billion to add liquidity.
Credit Offtake Trends
* Credit offtake had bottomed in May 2025 after regulatory changes.
* Some improvement seen since then, but credit growth remains weak relative to the high GDP growth.
* Bank credit growth/real GDP growth stood at 1.3x, below the long-term average of 1.8x.
* Sustained improvement in credit demand is needed for growth to be durable.
Current Rates
Policy Rates
* Repo Rate: 5.25%
* SDF Rate: 5.00%
* MSF/Bank Rate: 5.50%
* Reverse Repo Rate: 3.35%
Reserve Ratios
* CRR: 3.00%
* SLR: 18.00%
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