RBI’s pause on rate hike falls on expected lines
RBI staying on a pause and maintaining its stance was in line with expectations, feel experts.
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Mumbai, June 08 RBI staying on a pause and maintaining its stance was in line with expectations, feel experts.
Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, says, “The RBI remains cautious on the inflation trajectory especially as inflation will remain above the 4 per cent target for the foreseeable future. The RBI continues to estimate average inflation slightly above 5 per cent for FY2024 and retained GDP growth at 6.5 per cent.”
We believe there are some downside risks to growth. We believe that rate cuts will be contingent on significant divergence in growth-inflation prospects. We maintain our call that the RBI will be on an extended pause, he added.
India is in a sweet spot, based on RBI GDP growth estimate of 6.5 per cent and Inflation estimate of 5.10 per cent for FY 24.
Deepak Agrawal, CIO- Fixed Income, Kotak Mahindra Asset Management Company, said, “Given that global central bank are still in hiking mode and future path of Fed Fund rate is unclear, RBI did the right thing by keeping the monetary policy stance unchanged as “withdrawal of accommodation”.
By Aug 2023 RBI will have more clarity on the El Nino risk on inflation and the future path of Fed Fund rate and can change the monetary policy stance to ‘Neutral’ in August.
