Monetary Policy - Expectation from YES Securities

Mr. Amar Ambani, Senior President & Institutional Research Head at YES SECURITIES

"With frequency indicators and GDP data conveying meaningful rebound in economic activity and retail inflation remaining stubbornly high, we not only expect the RBI to maintain status quo in Dec-20 policy meeting, but the minimal chance of a 25bps rate cut in Feb-21 also appears to be fading away.

We also believe that the MPC may not do much on the non-interest rate tools, as significant measures (OMOs, TLTROs) have already been unleashed during the last policy meeting. The fact that liquidity remains high, while growth is gaining traction, makes us feel that RBI will adopt a wait-and-watch approach for next few months.

We will likely see RBI upgrade its growth outlook, wherein the Central bank will scale down on its earlier pessimistic GDP projection of 9.5% for FY21. Similarly, RBI will also update on the inflation trajectory, when compared with the earlier expectations of CPI moderating in Q4 FY21."

Source : Equity Bulls

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