The Reserve Bank of India's Monetary Policy Committee (MPC) on Friday voted unanimously to keep the repo rate -- the key rate at which it lends short-term funds to commercial banks -- unchanged on April 8. The RBI raised its consumer inflation projections for FY23 and lowered its estimates for GDP growth. It rewrote its stance to 'less accommodative' from 'accommodative'.

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On Inflation, MPC said that on the assumption of a normal monsoon in 2022 and an average crude oil price of US $ 100 per barrel, inflation is now projected at 5.7 percent in 2022-23.

Read Here | RBI raises inflation projection from 4.5% to 5.7% for FY23 calculating crude at $100/bbl

Upasna Bhardwaj, Sr Economist at Kotak Mahindra Bank said that the second-quarter estimates look very understated by RBI at 5 percent.

"Our H1 number is averaging around 6.4 percent. So that's the huge deviation I see from RBI’s estimates. Clearly, there are upside risks in the near term and the pass-through of all the increasing input prices has to sail through somewhere. So I do see an upside but I would say that there's now that RBI’s estimates are relatively more realistic. There could be a 10-20 basis of an upside to the numbers, but relatively they are on board now compared to where they were in the February policy.”

Indranil Pan, Chief Economist at Yes Bank said, “We can't sort of hold RBI hostage whether the trajectory is correct or not correct, they have taken an assumption of $100 a barrel. If the war-like scenario gets over, and if there is some sort of stability that comes to the financial markets, we can see lower levels of inflation than what has been projected.”

The RBI revised India's real Gross Domestic Product (GDP) growth rate to 7.2 percent from February's 7.8 percent for FY23. In a press briefing on the MPC decision, RBI Governor Shaktikanta Das said that escalating geopolitical tensions have cast expectations to be lower on GDP growth.

Read Here | Shaktikanta Das: RBI cuts India's real GDP growth forecast to 7.2% for FY23

On Standing Deposit Facility (SDF) RBI said by removing the binding collateral constraint on the central bank, the SDF strengthens the operating framework of monetary policy. Accordingly, it has now been decided to introduce the SDF as the floor of the LAF corridor

Amandeep Chopra, Group President & Hd-Fixed Income at UTI MF said, “I must point out that the reverse repo rate is still at 3.35. What RBI has essentially done is they brought in this new element of SDF, which they have priced it at 3.75 overnight and this is with reference to the repo rate, which they still treat as their policy rate. So 3.75 - 25 basis points below the repo rate and they have used marginal standing facility (MSF) at the upper end of the corridor as being something which is available at demand.”

Also Read | Central bank leaves repo rate unchanged; continues with 'accommodative' stance

On deposit rate Rajiv Anand, EC at Axis Bank said, “I think deposit rates have already gone up. If you look at it, pre-March 31, perhaps the retail deposit rates haven't moved. But if you look at the non-retail term deposits, particularly the LCR friendly deposits, and more importantly, the CD rates, they have gone up by anything between 25 bps and 50 bps, pre-March 31 itself. I think this normalization of deposit rates will continue and ultimately banking is a marginal cost business if deposit rates go up.”

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(Edited by : Abhishek Jha)