RBI Governor Shaktikanta Das on Wednesday announced the MPC's decision to keep the repo rate unchanged at 6.5 per cent, maintaining a status quo for the 10th consecutive review. The RBI governor announced the panel's decision to revise its policy stance from "withdrawal of accommodation" to "neutral". This change allows the central bank to adjust rates as needed based on domestic macroeconomic conditions.

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Madhavi Arora, Lead Economist, Emkay Global Financial Services:

"The policy decision this time around wasn’t easy, and was indeed tricky for the RBI to find a balance in its policy biases with so many moving pieces".

According to Arora, the MPC had a lot to process on the domestic and external fronts:

(i) Incipient weakness in growth indicators,
(ii) Demand-led core disinflationary impulse despite noisy food dynamics, but a still-elusive 4% inflation target;
(iii) Comfortable banking liquidity, easy financial conditions on net;
(iv) The fluidity of global narratives with global fears of re-ignition of ‘high for long’ scenario, amidst Fed’s massive 50bp cut in Sep;
(v) Geopolitical stress and upcoming US election event risk which could materially disturb Asian FX dynamics, amid ratcheting up of US-China trade war.

"Thus, no rate action, in conjunction with a stance change to neutral with stress on being 'actively disinflationary' is indeed their best bet to prep ground for start of a shallow easing cycle, possibly but not necessarily from December," Madhavi added.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities:

"The RBI has shifted its stance from a "withdrawal of accommodation" to a "neutral" position while maintaining the repo rate at 6.5 per cent. This decision signals a clear focus on domestic economic conditions, prioritizing them over aligning with the U.S. Federal Reserve's rate movements. The neutral stance provides the RBI with the flexibility to adjust interest rates in response to evolving inflation dynamics."

Santosh Meena, Head of Research at Swastika Investmart:

"The policy statement addressed key factors such as geopolitical tensions, inflation, economic growth, and risks within the NBFC sector. However, the overall tone remained positive from the market's perspective. While there was no explicit mention of a rate cut, subtle cues in the governor's speech hint at the possibility of a rate reduction in upcoming policies."

"Markets are expected to respond positively, with Nifty likely targeting the 25,330 and 25,500 levels in the near term. Similarly, Bank Nifty could aim for 51,700 and 52,300 as immediate targets," Meena stated.

Manju Yagnik, Vice Chairperson of Nahar Group and Senior Vice President of NAREDCO Maharashtra:

"The RBI's decision to maintain the repo rate at 6.5% represents a significant positive step for the real estate sector, providing essential stability amid ongoing global economic uncertainties. This consistency is particularly crucial as we approach the festive season, which is traditionally a peak time for home purchases. By keeping borrowing costs steady, EMIs remain manageable, encouraging potential homebuyers to invest in property, especially in the affordable housing segment." 

Furthermore, this stability will benefit developers by improving cash flow and reducing borrowing expenses for ongoing projects. While we recognize the challenges posed by geopolitical tensions, I believe this decision will create a conducive environment for both homebuyers and investors, ultimately supporting the growth trajectory of the housing market in India."

Manoranjan Sharma, Chief Economist at Infomerics Ratings:

"Well, well! Hitting the bull’s eye again and again, quite like Arjuna hitting the eye of the fish while looking in a mirror beneath him. Others may sometimes be correct but consistency is our virtue and is the key differentiator. I don’t remember having ever gone wrong in the last 10-15 years. What does it show? Basically two things- the RBI is following an objective and transparent policy and we are able to connect the dots and arrive at meaningful inferences and useful policy prescriptions."

Anitha Rangan, Economist, Equirus:

"However we would think that next move is unlikely to be a rate cut, at this juncture, RBI will only keep its options open towards accommodation. The hawkish points emanate from the points around: a) Inflation is on a declining path although there is some distance to cover with upside risks from geopolitics and weather while the agricultural outlook is buoyant and positive for food prices, b) RBI keeps its guard on noting that “we have to be very careful of opening the gate and need to keep the horse to a tight leash” and mentioning that RBI cannot be complacent with the rapidly evolving global conditions. The change in stance rather gives greater flexibility and optionality to act in sync with the evolving outlook."

Aamar Deo Singh, Sr. Vice President of Research, Angel One:

"Keeping in view the prevailing inflation and growth condition, the RBI remains majorly focussed on inflation and the alignment to the MPC targets."

Rajeev Radhakrishnan, CIO - Fixed Income, SBI Mutual Fund:

“The evolving domestic growth inflation outlook clearly was apt for a change in the monetary policy stance to neutral. While remaining cognizant of emerging risks on the inflation outlook, the neutral stance provides more flexibility to address evolving macro dynamics. From a near term perspective, the policy focus would likely remain attuned to address the skewness in system liquidity and any potential financial stability risks".

Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS:

"We believe a potential rate cut could be expected in Feb’25. Given the increasing anticipation of a rate cut in the upcoming meetings, margin pressures could act as a dampener for bank’s RoAs.

According to Naveen Kulkarni, from a banking sector perspective, the upcoming Q2 results should replicate banks’ Q1 performance in terms of margins which are expected to moderate marginally. In contrast to Q1 performance, banks have seen an improvement in deposit growth on a sequential basis as per the provisional updates provided by banks, although the pace of credit growth has slowed down as banks look to align their credit and deposit growth.

"We believe some banks could see a downward revision in their credit growth estimates for FY25 driven by their attempt to maintain a balanced LDR, slower corporate growth pick-up and moderating credit in the unsecured segments. We would prefer banks that offer comfort on valuations, better asset quality profile and a healthy deposit franchise," Kulkarni stated.