The RBI maintained the status quo on policy rates and stance, aligning with the market expectations.
Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life,“The RBI maintained the status quo on policy rates and stance, aligning with the market expectations. The headline CPI projection for FY24 remains unchanged at 5.4%, despite uncertainties around production due to the lower kharif sowing, low reservoir levels, and volatile global food and energy prices. The RBI governor reiterated the intention to bring inflation to a level of 4% on a durable basis. In line with its monetary policy stance, the RBI may need to consider OMO-sales to manage liquidity as necessary.”
Given recent inflationary pressures driven by food & vegetable prices in India, the extended tightening measures by global central banks, and the RBI's commitment to lower domestic inflation to 4%, the outlook for interest rates appears cautious in the near term. Reddy added: “The possibility of OMO-sales to manage liquidity may pose short-term pressure on interest rates. We believe that the RBI's future actions will depend on evolving data, and we continue to expect a long pause.”
