By:-Vikram Chhabra, Senior Economist, 360 ONE Asset
The RBI’s decision to keep policy rates unchanged was broadly in line with our expectations. Since the previous meeting, the growth outlook has remained largely stable, while upside risks to inflation have emerged amid rising commodity prices. In this context, it is reasonable for the RBI to adopt a wait-and-watch approach until greater clarity emerges on the macroeconomic outlook. Additionally, both the inflation and GDP series are scheduled for revision, and it would be prudent to base policy decisions on the updated datasets. Broadly, we still see room for at most one additional rate cut, provided the inflation outlook remains benign. Going forward, policy focus is likely to shift toward more effective liquidity management.
