| Reaction Quotes | RBI Monetary Policy |
Reaction Quote | RBI Monetary Policy | Shanti Ekambaram | Whole-Time Director |
| Kotak Mahindra Bank Ltd | 6th October, 2023 |
As expected, it was a “ status quo” policy with a renewed emphasis on the inflation target of 4% and resilient macro-economic indicators. Both the economic growth and inflation estimates for the year have been maintained with a commitment to ensure adequate liquidity for supporting growth. The stance remains “withdrawal of accommodation”. Economic trends hint at strong underlying growth trends and healthy credit growth. Even as urban consumption remains robust, the rural markets are showing a promising revival. Overall, a hawkish policy and RBI remains watchful of emerging global volatilities for any policy action to ensure continued price and financial stability.
Reaction Quote | RBI Monetary Policy | Saurabh Mishra | CEO | Investment Landscape | 6th October, 2023
“The RBI Monetary Policy Committee has maintained the key policy repo rate at 6.5% for the fourth consecutive meeting. The RBI intends to manage liquidity through open market operations (OMO) involving Government securities (G-secs) in an auction mode.”
“Despite the expected liquidity challenges in the upcoming months, the RBI has not introduced any significant measures for durable liquidity absorption, such as a Cash Reserve Ratio (CRR) hike, at this time. However, it has indicated its willingness to conduct OMO sales if necessary to regulate liquidity conditions.”
“This signals the RBI’s inclination towards tighter liquidity conditions in the future, driven by concerns related to both inflation risks and financial stability, given the global tightening of liquidity. This stance is in line with the central bank’s commitment to anchoring inflation at 4%, emphasizing that keeping it below the upper band of the target range (6%) is insufficient.”
Reaction Quote | RBI Monetary Policy | Rajani Sinha | Chief Economist | CareEdge Ratings | 6th October, 2023
“Overall, the policy had a hawkish undertone to it. The governor sounded cautious about inflation even though the full-year inflation projection was unchanged. It is to be noted that the governor reiterated the RBI’s commitment to bring CPI inflation down to 4% target. The RBI kept the GDP growth projection for FY24 untouched as they await additional data points to comprehensively assess the evolving dynamics.
Furthermore, the RBI remains watchful of the liquidity conditions and wants to ensure no build-up of surplus liquidity. Hence the governor announced that RBI would consider open market operation (OMO) sale of government securities to mop up excess liquidity as required. We expect the RBI to start its rate-cutting journey from the second quarter of next fiscal year as inflation edges closer to 4% target.”
Reaction Quote | RBI Monetary Policy | Prasenjit Basu | Chief Economist | ICICI Securities | 6th October, 2023
“Unsurprisingly, the RBI’s MPC decided to keep its policy rate unchanged at 6.5% and retained its stance of ‘withdrawal of accommodation’. The key change is a much more benign inflation forecast, suggesting that the RBI expects CPI inflation to abate to well below 6% YoY in Sep’23, and to stay at 5.6% YoY in Oct-Dec’23 and 5.2% YoY in Jan-Mar’24. We continue to expect the next policy move to be a rate cut in Q1FY25.”
