Finance & Economy | News & Insights

RBI’s Policy: A Lesser Hawkish Pause with Cautious Undertone

Published: December 9, 2023


  • In line with the expectations, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has unanimously decided to maintain the benchmark repo rate at 6.5%. Concurrently, the MPC has upheld its stance at ‘withdrawal of accommodation’ with a 5:1 majority.
  • The RBI raised its growth projection for FY24 to 7%, it now expects stronger growth in the second half.
  • The RBI has maintained its inflation projections for FY24 at 5.4%, foreseeing a gradual alignment of quarterly headline inflation towards its 4% target by Q2 FY25.
  • The governor noted that the evolution of liquidity conditions aligns with the current monetary policy stance. The absence of any mention of future OMO sales in the governor’s statement provides comfort to the bond market.
  • We expect the RBI to keep liquidity conditions tight while ensuring ample liquidity is available to support the credit demand.
  • The likelihood of a rate cut is now expected after the first quarter of the next fiscal when inflation edges closer to the 4% target.


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