RBI MPC meeting: Experts predict sustained growth on RBI’s projection

RBI MPC meeting outcome: In 5th monetary policy meeting of teh financial year 2023-24, the Reserve Bank of India (RBI) has decided to keep repo rate unchanged at 6.50 per cent. In fact, the RBI raised its gross domestic product (GDP) forecast for current fiscal by 50 bps, which has gone down well among markets and economic experts. They said that RBI hs not dropped even a single negative surprise in this monetary policy committee (MPC) meeting and expected that the RBI MPC meeting outcome would further fuel growth of the national economy.

Speaking on RBI MPC meeting outcome, Sandeep Pandey, Founder at Basav Capital said, "RBI has managed to keep the inflation within its targets, which enabled the Indian central bank to maintain status quo. From, now onwards, interest rate change is subject to inflation and further dip in inflation means a rate cut. So, infrastructure projects, which is cross-connection with various other segments is going to accelerate. This is going to have cascading impact on lending business of banks."

Push in Indian economy

Sandeep Pandey, who is former Deputy Vice President of HDFC Bank as well, went on to add that core sector growth and rising per capital income is going to fuel Indian economy at a faster rate and RBI Governor Shaktikanta Das has done the right thing by keeping repo rate unchanged. Now we would be moving at a faster rate to become a $5 trilllion economy.

Expecting now further rate hike surprise from RBI, Sujan Hajra, Chief Economist & Executive Director at Anand Rathi said, "The RBI has increased its GDP forecast for FY24 by 50 basis points, to 7%, while leaving the inflation forecast unchanged. Although the magnitude of the GDP forecast upgrade exceeded our initial projections, all other declarations and positions remained largely consistent with our expectations. As of now, the RBI anticipates that liquidity conditions will remain stable. The policy was, on the whole, less hawkish than had been anticipated."

"Simultaneously, the governor issues specific warnings regarding premature adjustments to monetary policy rates and liquidity stance, which indicate that the rate pause and liquidity withdrawal stance may persist for a longer duration than initially expected. We maintain our assessment that no rate reductions would occur until the latter part of fiscal year FY25. An upward adjustment to the GDP forecast would have a favourable effect on market sentiment," Anand Rathi expert added.

Rise in demand

Pointing towards the rise in demand after RBI MPC meeting outcome, Sandeep Pandey of Basav Capital said, "After RBI's decision to keep repo rate unchanged, demand is expected to speed up in manufacturing and engineering sector. This is good for lending business of various banks. Hence, demand in auto, real estate, hospitality, tourism, etc. sector is expected to shoot up in next one to two quarter."

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