ANZ, SocGen & TD Updated Views Post  RBI

Updated ANZ, SocGen and TD views below, these banks don't feel the door is completely closed in terms of further hikes.

ANZ: Absent any inflation shocks, the RBI may prefer to wait and assess the impact of monetary tightening undertaken so far on the upcoming inflation prints. Although growth doesn’t seem to be a pressing policy concern, the RBI’s baseline projections point to falling inflation and the real repo rate is now seen at 1.3% by end of FY24, which is a fairly positive level. That said, an unchanged hawkish stance means that the RBI hasn’t pivoted yet, and if inflation rises again above expectations, it stands ready to resume hiking. Upside inflation risks from a surge in oil prices and poor monsoon will feature prominently on the radar.

SocGen: "The RBI Monetary Policy Committee (MPC) unanimously decided to keep the policy rate unchanged at 6.5%. This was in line with our expectation but in contrast to the market’s expectation of another hike of 25bp. The RBI governor echoed our view that it is time to pause and not only do a health check of the banking system (in the aftermath of the SVB debacle) following the steepest ever increase in the policy rate but also allow more time for the aggressive monetary policy decisions of late to play out, especially when there are palpable signs of weakness in economic activity. We also believe that with the country unable to create adequate jobs, resulting in a continued elevated unemployment rate despite extremely low labour participation, the central bank would find it difficult to raise rates given that India is heading into a general election next year. While we believe that the RBI is done with its rate-hiking cycle, this may not yet be a done deal. With multiple tailwinds to inflation (El Niño impact on food prices, OPEC’s decision to cut oil production) potentially gaining in intensity, the RBI’s decision is likely to be data dependent. This is also reflected in the unchanged monetary policy stance."

TD: "On balance, while we think there is a risk of at least one more hike from the RBI we think moderating inflation in the months ahead will allow the RBI to hold off from hiking further. As such, we now think that 6.50% marks the terminal rate for the Bank. We maintain our view that the RBI will begin to ease by end 2023, but the decision to pause today suggests we may need to push back easing expectations if the path to lower inflation becomes more protracted as a result."