RBI Monetary Policy: Views of Mr. Indranil Pan, Chief Economist – YES BANK
RBI delivered a 50 bps hike in the repo rate as it continues its effort towards frontloading of interest rate increases, while ensuring that the second-round effects of the supply side shocks are contained and long-term inflation expectations are anchored. With data indicating slowing global growth, central bankers have started to highlight that data will significantly determine the pace of monetary policy tightening going forward. Thus, we point to a more data driven RBI from here on (like most other Central Banks across the world). As the trajectory of CPI inflation is pointing downwards, we expect the RBI to moderate the pace of hikes and raise the repo rate by 25-35 bps in September and 25 bps in December to 5.90-6.00% and pause thereafter to assess the growth-inflation dynamics.