Market celebrates RBI’s decision to maintain status quo; Sensex surges by 1,460 points to reach 76,500 again

The Reserve Bank of India’s recent policy decision to keep the policy rate unchanged at 6.5% has garnered mixed reactions from experts in the financial sector. Ajit Kumar Kabi, Research Analyst at LKP Securities, noted that the RBI’s decision was in line with expectations, with a majority vote of 4:2. He emphasized the importance of monitoring food inflation and predicted a possible accommodative stance post the full budget announcement on July 24.

Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, highlighted the split in voting patterns among MPC members, indicating a potential shift in policies in the future. She suggested that the MPC may adopt a wait-and-watch approach until more clarity is obtained from monsoons and the quality of expenditure from the Budget.

Madan Sabnavis, Chief Economist at Bank of Baroda, pointed out the significant revision in GDP forecasts to 7% for the year, driven by a projected revival in consumption demand in the third and fourth quarters. He also noted the RBI’s inflation forecast for the next year, indicating a possible rate cut only after August of next year.

Overall, experts are cautiously optimistic about the RBI’s policy decision, with a consensus that a change in stance may be on the horizon in the coming months. The financial markets will be closely monitoring key indicators such as inflation, GDP growth, and consumption demand to gauge the future direction of monetary policy.