This could have been seen as hawkish if it was not for the mention of the risk of overtightening in the Governors’ speech. The mention of risk of overtightening — for the first time — has partly offset the hawkishness of the underlying inflationary concerns otherwise. The Repo rate has been retained at 6.5 per cent (and the policy stance has, however, stayed at ‘withdrawal of accommodation’). The MPC has re-emphasised its focus on 4 per cent inflation target. Besides the domestic factors, RBI’s decisions on overnight rates and hence liquidity management will remain driven by global turn of events.

Source: The Hindu December 12, 2023 03:02 UTC