Dr. Poonam Tandon, CIO, IndiaFirst Life Insurance Co. Ltd

“The RBI again raised key benchmark rates by 50bp for the third consecutive time and now the repo rate is back to pre-pandemic levels. The committee has remained focused on calibrated withdrawal of accommodation to ensure inflation remains within the target while supporting growth. The RBI stated although domestic economic activity is showing signs of broadening, Indian economy still faces global headwinds like geo-political risks and high inflation. The domestic recovery is supported by relatively stable urban demand while rural economy is showing mixed trends. FY23 Real GDP forecast has been retained at 7.2%. On the inflation front, while CPI has eased from its surge in April but remains uncomfortably high and above upper threshold of target. FY23 Inflation projection is retained at 6.7% on assumption of normal monsoon and crude oil at USD 105/bbl. On the liquidity front, excess liquidity in the banking system has moderated to Rs 3.8 lakh crore from Rs 6.7 lakh crore in April-May. The RBI will undertake both VRR and VRRR operations depending on the evolving liquidity and financial market conditions. On the currency front, the RBI has undertaken various measures to curb volatility in exchange rate and ensure stability of Rupee. The committee also listed other measures – 1) enable standalone primary dealers to offer all forex market-making facilities, and 2) Bharat Bill payment system to accept cross-border inward bill payments by NRIs. Overall, the policy was on expected lines with growth and inflation targets being unchanged and RBI reiterating to manage monetary and financial market conditions in a calibrated and proactive manner.”