Monetary Policy Oct'24

RBI MPC (with 3 out of 6 of its members being newly appointed) kept the?status quo on policy rates (completely on expected lines) but changed the stance of policy to "NEUTRAL"?from "Withdrawal of Accommodation" for the first time since April 2019 and thus took a positive step towards easing side following FOMC jumbo rate cut last month. Change of stance was priced in the?market only by 30% and to that extent it was a positive surprise for the traders.? Dr Nagesh Kumar was the only member who dissented by voting for a 25bps rate cut.?

RBI kept FY 2024-25 GDP growth and CPI target unchanged at 7.2% and 4.5% respectively. However, 1y forward CPI (Q1 20258-26) has been down moderately by 10 bps.? The market now expects RBI to cut the?rate once in Dec/ Feb policy if Geo-political risk subsides.