RBI Monetary Policy Review - No Surprises; GDP Growth Rate Revised Upward: IDBI Capital

IDBI Capital Report

In line with expectations, the Monetary Policy Committee continued to retain policy repo rate at 6.5% with focus on withdrawal of accommodation stance. Inflation projections for FY24 have been retained at 5.4% while, gross domestic product growth forecast revised upwards to 7.3% (7.0% earlier) for FY24.

The standing deposit facility rate remained unchanged at 6.25% and the marginal standing facility rate and the Bank Rate at 6.75%. The system level liquidity deficit widened from an average of Rs 0.42 lakh crore during September-November 2023 to Rs 1.61 lakh crore during December-January.

RBI pro-actively injected liquidity through both the main and the fine-tuning repo operations to ease liquidity tightness in the system. Among our banking coverage universe, we retain our top picks as ICICI Bank and City Union bank.

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