Quote on the MPC`s decision from Mr. Rajkumar Singhal, MD & CEO at Quest Investment Managers
Below the Quote on the MPC’s decision from Mr. Rajkumar Singhal, MD & CEO at Quest Investment Managers
“RBI’s decision to raise the repo rate by 25 bps to 5.5% and shift the policy stance to ‘calibrated tightening’ reflects the central bank’s focus on containing inflation while preserving the underlying momentum in economic growth. With inflationary pressures expected to remain elevated through the fiscal and the external environment continuing to remain volatile, maintaining price stability will be critical. At the same time, the RBI’s approach indicates that it remains mindful of the need to support growth.
The RBI’s decision to constitute a Technical Consultative Committee for Financial Markets, bringing together stakeholders to deliberate on policy and operational matters, is also a constructive step. Such measures can strengthen market participation and improve the efficiency and functioning of financial markets. The combination of monetary tightening with continued market-oriented reforms is a positive signal for the broader financial ecosystem.
Looking ahead, the key factors to watch will be the trajectory of inflation, the external environment and their impact on domestic growth. India’s underlying economic fundamentals remain encouraging, with GDP growth expected to remain above 7%, credit growth continuing to be healthy, and the banking and NBFC sectors maintaining sound system-level parameters. Against this backdrop, the near-term impact of calibrated tightening on market sentiment is likely to remain contained. However, the duration and extent of the rate-hike cycle will remain important variables, with the path ultimately dependent on the evolving growth-inflation dynamics.”
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