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The Reserve Bank of India (RBI) agreed by a 6-0 vote to keep the policy repo rate on hold and this gesture is considered for economists at ANZ to hint a 25bp reduction in June.

Key quotes

“The RBI unanimously kept the policy repo rate on hold for the second time in a row. The Monetary Policy Committee (MPC) will retain the accommodative stance “as long as it is necessary to revive growth”. It simultaneously raised the near-term inflation forecasts while maintaining its growth forecast at 5% for FY20.” 

“We see the MPC’s insistence on maintaining the accommodative stance as a sign of possible support for further rate cuts. We maintain our call for a 25bp reduction in the repo rate in June.”

“GDP growth projection FY20 (fiscal year ending March 2020) was maintained at 5.0%. FY21 GDP growth was raised to 6%.”