Views on RBI MPC by Ms. Anitha Rangan, Economist, Equirus Securities
Below the Views on RBI MPC by Ms. Anitha Rangan, Economist, Equirus Securities
While giving a jumbo cut of 50 bp, RBI has shifted the stance to neutral from accommodation. It was just the previous policy that RBI changed its stance, emphasizing that the future direction will be cut. However in this policy citing that there is limited to space to cut, RBI has reversed its previous dovishness.
However an alternate bout of dovishness comes from the 100 bp cut in CRR in four tranches of 25 bp each over the course of the year which will release INR 2.5 lakh crores of liquidity. This is meant to speed up the rate cut transmission which is slow as of now.
A brake on further rate cuts suggests that RBI is finally concerned about FX but to keep domestic growth engine running, continuing to give liquidity boost. Inflation has been revised downward to 3.7% from 4% while growth for FY26 is unchanged at 6.5%. However it appears that it is no longer about growth-inflation – it is about external versus internal. Front loading is necessary for growth but externalities is keeping further cuts away. Do what is takes now – risks will be managed down the road.
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