Rates Steady, Likewise for Policy Stance, Growth Forecast Nudged Higher

The RBI kept rates on hold at 6.50%, which was widely expected by the market. The central bank also maintained its bias on the withdrawal of accommodation.

• On both counts the RBI MPC voted 4 to 2, which was a shift from the prior meeting where the vote count was 5-1 on both counts.
• This may be construed as a dovish outcome, although the tone of RBI Governor Das's press conference doesn't suggest a near term policy shift is likely.
• Most notably the 2025 FY growth forecast was revised up to 7.2% from the prior 7.0%. This signals confidence in the growth outlook, and Das highlighted a number of positives - private consumption is recovering and government activity is likely to boost Capex.
• On inflation the 4.5% forecast for the current financial year was retained. A lot of focus was on food inflation and the near term outlook. Governor Das stated the central bank needs to be vigilant to the upside risks, especially from food.
• India needs to move to the 4% CPI target on a durable basis Das added. Presumably this is needed before a shift to neutral/easier policy settings can unfold.