Highlights:
- The MPC to maintain the policy rate unchanged in this meeting, the governor’s statement to have a dovish undertone.
- Focus on liquidity management and financial stability will continue. Measures to inject liquidity likely going ahead.
- The MPC is expected to revise its inflation projection for FY25 upwards, aligning more closely with our forecast of 4.8%.
- We expect RBI to revise its GDP growth forecast downwards, closer to our projection of 6.5% for FY25.
- We expect the CPI inflation to fall below 5% in Q4 FY25, providing a window for a 25-bps rate cut in February policy meeting.
