”The decision to pause along with no change in stance was in line with the market expectation. We feel that the tone is relatively more hawkish than the August Policy keeping in mind the additional emphasis being laid on managing the liquidity position. It seems that the RBI MPC may continue to remain on a pause even in early FY2025 with a focused view on liquidity management. The RBI re-emphasized the aim to align inflation to the 4% target over the medium term. The Monetary Policy Report projects average CPI inflation at 4.5% in FY2025. The RBI remains comfortable on the growth front though risks to the outlook will be from the external front. The Monetary Policy Report projects GDP growth at 6.5% in FY2025.
The MPC has expressed its concern over global growth losing momentum and opines that the view taken by major central banks about maintaining higher for longer rates is inflicting volatility to the financial markets. Back home its comfortable about the buoyancy in the urban consumption and improvement shown in pick up in rural demand. MPC is also very upbeat on domestic economic activity holding up which is further expected to be boosted by the festive consumption demand.”
