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Below the Views on RBI Policy by Siddharth Chaudhary, Senior Fund Manager - Fixed Income, Bajaj Finserv Asset Management

“Today’s MPC meeting’s outcome is largely in line with market expectations. The upward revision in real GDP growth projection by 20 bps though wasn’t largely expected by market but given the momentum in recent quarters it doesn’t come as a big surprise. Also, note we now have one more MPC member in dissent voting for 25 bps rate cut along with change in stance to neutral.

The RBI’s policy rate of 6.5% amounts to a real policy rate of 2%, based on the central bank’s year-ahead inflation projection. The neutral real policy rate can be estimated as being in the 1.0%-1.5% range. The real policy rate facing the industrial sector is even higher. This creates the possibility of more members in MPC turning dovish in coming months barring any food inflation shock or big change in Fiscal policy (watch out for Final Budget FY 2025)”.

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