A policy addressing market microstructure

The Monetary Policy Committee (MPC) kept the rates and policy stance unchanged.

- SOUMYA KANTI GHOSH

The MPC reiterated its commitment to restoring the balance between inflation and growth in the overall interest of the economy.

The cut in cash reserve ratio (CRR) was not a part of the policy document.

The policy has some key takeaways. The real gross domestic product (GDP) forecast for FY25 has now been revised to 6.6 per cent.

This downward revision is nothing new as the Reserve Bank of India's (RBI's) growth projections in FY22 and FY23 were revised downwards in October on an average by 90 basis points (bps).

At this rate, the 6.6 per cent growth projections by RBI look to be higher than consensus.

On the inflation front, food inflation is likely to soften in Q4 with seasonal easing of vegetables prices and kharif harvest arrivals.

However, the overall outlook emphasises that near-term inflation and growth outcomes in India have turned somewhat adverse since the October policy.

Consumer price index (CPI) inflation for 2024-25 is now projected at 4.8 per cent.