The MPC on Thursday delivered a 25 bps rate cut while maintaining a ‘Neutral’ stance. MPC voted 4-2 (Ghate & Viral voted for no cut) in favour of the rate cut while the neutral stance was retained with a 5-1 vote. Dholakia voted for a change in the stance to Accommodative. CRR was kept unchanged.
Though the rate cut was in line with the market expectations, the unchanged “Neutral “stance was disappointing as the market was expecting a change in stance to accommodative which did not come about. A small segment of the market was also expecting a 50bps rate cut.
The MPC lowered its forecast both for inflation and GDP growth while sounding cautious on the fiscal situation.