Satish Chandra Aluri, Lemonn Markets Desk

“MPC unanimously voted to reduce the policy rate by 25bps to 6.25% from 6.50% – As widely expected. They unanimously decided to continue with “neutral” stance with an unambiguous focus on inflation.

They also noted that while growth is recovering, it remains below last year’s level, and inflation trends allow for rate easing, RBI Governor Sanjay Malhotra said in his first policy meeting post his appointment in December.

In our view, the outcome was largely along the expected lines with the new governor delivering the first rate cut as widely expected. RBI’s forecasts indicate continued moderation in inflation while growth pick-up is expected to be more gradual indicating the emphasis on supporting growth from a policy perspective while maintaining the “neutral” stance gives them the flexibility to address potential inflation concerns with an eye toward global developments like trade war.”

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