“RBI on expected lines continued with the rate pause decision which it had announced in April’23 and maintained the status quo on stance on withdrawal of accommodation as the fight for taming the inflation continues. It has emphasised on the continued global fluidic situation prevailing. The policy tone was balanced, but it remained non-committal on the decision on  future rate actions by MPC. Probably it is very unlikely if RBI would precede the Fed in reversing its course of rate hikes in the future.

RBI lowered FY24 inflation projection by 10 bps to 5.1% Y-o-Y basis and retained FY24 GDP projections at 6.5% Y-o-Y. Slowing inflation and a robust economic recovery are certainly aiding the RBI to stay put on rates but it has raised concerns on the global growth slowdown and the resultant impact it will have on the domestic economy.

After today’s meeting, it seems that the present pause by RBI on rate actions may continue for this calendar year.”