Reaction from Mr. Sumit Bilgaiyan, Co –Founder and Director, Equity99post RBI rate hike announcement.
As per our expectation RBI has hiked repo rate by 25 bps to 6.50%. All the members of the Monetary Policy Committee’s, except Ravindra Dholakia voted to hike the repo rate while keeping the policy stance unchanged at neutral. This step was very much anticipated due to increased yields and crude prices. The MPC has upwardly revised the inflation forecast for the H2FY19 to 4.8% from 4.7% seen in June policy. RBI expects retail inflation in 4.7%-4.8% range in the H2FY19 excluding the HRA impact with risks evenly balanced. Of late we have seen sharp fluctuations in currency as global risks increased due to the trade wars. It will be an interesting to see how a FOMC reacts to it. We believe market has already factored in this hike. India is on a high growth path which can be clearly seen from RBI’s statements as it retained FY19 GDP growth forecast at 7.4%.
