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Monetary policy preview: RBI to remain on sidelines with a neutral stance

Inflation expectations have improved significantly and stabilised below 9 per cent for a year and an extended pause is unlikely to change the expectations dynamic materially

Reserve Bank of India
Premium

Kaushik Das
We expect the Reserve Bank of India (RBI) to keep all key policy rates unchanged, while maintaining a neutral stance. There are several risks to the inflation outlook, which will keep RBI cautious but these risks have all been highlighted in the past and there have been no incremental negative developments in the past few weeks. On the contrary, consumer price index (CPI) inflation has surprised to the downside in February, coming at 4.4 per cent, when the Bloomberg consensus expectation was for 4.7 per cent.

Given the likely inflation trajectory, it is possible that RBI will look through the

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