By:- Shauryam Gupta, CEO, Rupeezy
“We expect RBI MPC to continue to Hold the Repo rate with a Neutral to bullish stance on overall economy, key reason being the growth in GDP domestic economic activity continues to outperform expectations, with GDP growth projected around 6.8%–7.0%, so RBI is not under presure to ease the liquidity in market. Inflation might be slightly an issue with Monsoon distribution which might impact the Food price volatility clubbed with Geo political risk on Crude prices, RBI remains fully committed to headline inflation durably aligns with its 4% target. Breathing space comes from fact that prices have come down from peak levels & this is biggest contributer to India’s import bill & Current Account Deficit. Geopolitical flash point creates an uncertain environment. This encourages RBI, to maintain a data-dependent, cautious policy posture.The big shift is on the rupee. With over $40 billion coming in through the FCNR(B) swap window, the RBI can manage currency pressure using these buffers instead of the repo rate. Simply put: rates will handle inflation, and reserves will handle the rupee volatility.”