Views on RBI Policy: Mr. Dhiraj Relli, MD & CEO, HDFC Securities

Mr. Dhiraj Relli, MD & CEO, HDFC Securities

Mr. Dhiraj Relli, MD & CEO, HDFC Securities

“The RBI MPC left the repo rates unchanged at its meet on June 08 in line with street expectations. MPC members were in a sweet spot in the backdrop of higher than expected GDP numbers and moderating headline and core inflation print. 

The MPC continued with the ‘withdrawal of accommodation’ stance (with 5:1 majority), as liquidity has turned into significant surplus mode further increased by the impact of withdrawal of Rs 2000 notes. A sustained moderation in inflation going forward may prompt the shift from “withdrawal of accommodation” to “neutral” stance. 

India’s economic activity has continued to demonstrate resilience. RBI retained its GDP forecast at 6.5% in FY24. 

Given the uncertainties around the impact of El-Nino conditions leading to sub-par monsoon in 2023, RBI remained cautious and revised the inflation projection by only 10bps to 5.1% for FY24. RBI Governor stressed on moving towards the primary target of 4% inflation. In this backdrop, expectation of rate cut in this calendar year seems to be faded. We expect the first rate cut perhaps in Feb 2024.”

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