RBI Monetary Policy Review - Repo Up By 35 Basis Points, Inline With Estimates: IDBI Capital

IDBI Capital Report

The Monetary Policy Committee increased the repo rate by 35 basis points to 6.25%, in line with market expectations, thereby resulted increase of 225 bps during FY23.

Consequently, the revised standing deposit facility stood at 6.00% and marginal standing facility to 6.50%. Further, consumer price index inflation expectations maintained above 6% at 6.7% for FY23 although CPI inflation declined in Oct-22 and global inflation (U.S. data) also came down.

Gsec bond yields have remain around ~7.3% backed by improvement in system liquidity. However, gross domestic product forecast has been further reduced to 6.8% versus 7% (Sept Policy) versus 7.2% (Aug Policy) although credit demand remain strong at 17% (fortnight data as of Nov 18).

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