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IDFC AMC Research
The policy review was set against a market expectation of largely status quo on most things.
The consumer price index forecast was expected to be raised, which would be mechanical given the higher than expected May print received in June.
Additionally there was expectation around enhancement of the variable rate reverse repo amount from the current Rs 2 lakh crore, although this expectation wasn’t uniform across market participants.
Given this, it prima facie delivered largely on expectation but with two caveats, as it were:
1. a lone dissent on maintenance of accommodative stance from external member Professor Varma.
2. Reserve Bank of India’s average inflation forecast for the year at 5.7% which is higher than what most market participants were expecting (although this can be looked positively as well since the likelihood of policy setters being negatively surprised now is that much lesser).
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