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RBI’s June policy minutes suggest the Reserve Bank of India’s (RBI) monetary policy committee (MPC) remains ‘data dependent’ and does not see the June hike as the start of a meaningful tightening cycle, notes the research team at Nomura.

Key Quotes

“Indeed, MPC members retained their neutral stance due to “uncertainty” on oil prices, among other factors. There has been no clarity on whether a hike will be delivered in August, which, in our view, will depend on how oil prices, core inflation and inflation expectations behave in the run-up to the meeting.”

“We believe India will remain in the high growth/high inflation phase in the next 3-4 months before entering into a phase of moderating growth (and inflation) in H2 FY19. We believe the RBI will look to frontload its tightening by hiking the repo rate by 25bp in August, before voting to pause.”