Reaction Quote, RBI Monetary Policy

Manish Kothari, Head – Commercial Banking, Kotak Mahindra Bank Limited. ““RBI Governor “walks the talk” on managing inflation as their key priority, yet again! Hence, the policy rate was kept unchanged, although the stance was changed to Neutral. His oft repeated statement was, “unambiguously focused on durable alignment of inflation with target, while supporting growth”; signaling clearly that any future rate cut would depend upon the inflation trajectory trending downwards. The Governor’s comfort for the change in stance seemingly stemmed from India’s growth story remaining intact; with private investment & consumption as well as Govt capex expected to pick up in H2, a stronger kharif output & rabi sowing due to a good monsoon lending to a pick-up in rural demand, and a resilient CAD & forex position keeping the INR steady. Hence, he retained the current year GDP growth target at 7.2%, while mentioning that adverse weather conditions and/or accentuated geopolitical conflicts could lead to downside risks for the economy.”