Thu. Feb 29th, 2024

By Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities

“The RBI as expected hiked the repo rate by 25 bps. The split mandate of 4-2 was also as expected. The stance too was unchanged which is in line with the excess liquidity continuing to be tightened. We see the RBI remaining concerned about inflation, especially core inflation. We expect inflation to average around 5.2% in FY2024 with adverse risks to growth likely to increase. The RBI will likely become increasingly data-dependent and look at the impact of past rate hikes on inflation-growth dynamics. We expect the RBI to pause from the next policy onwards with a likely shift in stance to neutral as the liquidity tightens further over March-April.”

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