RBI Governor Shaktikanta Das announced on February 8 that the Indian central bank would keep its policy stance maintained at "withdrawal of accommodation" because inflation still remains to be in a sticky zone.

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However, with the inflation cloud starting to lift, the RBI revised its growth forecast in the February policy meeting, the last for this fiscal year. The RBI has revised its real GDP target for FY24 to 6.4 percent with the first quarter expected to see a growth of 7.8 percent.

The Break-Up

The governor noted that the current global macro risks are evenly balanced on growth and said he was hopeful of a robust third quarter at 6.2 percent.

"On balance, the MPC is of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, breakcore inflation persistence and thereby strengthen medium-term growth prospects," reads the policy document.

Reacting to the policy, Kaushik Das, Chief Economist at Deutsche Bank expressed surprise in an interview with CNBC-TV18.

"I am surprised with not just the growth forecast, which you alluded to 6.4 percent, which is higher than the consensus forecast of 6 percent but if you see inflation forecast of FY24, that's been given at 5.3 percent, where the consensus forecast is about 5 percent," he said.

The Committee lowered the inflation projection for FY23 to 6.5 percent, governor Shaktikanta Das announced. In the last MPC meeting inflation projection for the financial year 2022-23 was at 6.7 percent.

When it comes to RBI's stance, Amandeep Chopra of UTI MF said that the central bank seems to be in no mood to indicate a change.

"It does leave a window open for maybe another potential rate hike going forward. And secondly, I guess, they still remain pretty much focused on a much lower inflation target than what I think markets will take comfort from which is around 5 percent," he told CNBC-TV18.

Further, the MPC decided to (4/6 members) increase the policy repo rate by 25 bps in line with the US Federal rate hike a couple of days ago.

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First Published:Feb 8, 2023 10:36 AM IST