RBI maintained a policy pause as it aimed for a delicate balance between growth and inflation. Inflation, though within tolerance, is categorically targeted at 4%. Global economic prospects have improved, delaying the expected pivot by central banks. Despite historic low policy differentials, the INR’s depreciation is expected to be controlled due to strong forex reserves and favourable factors. Surplus liquidity has eased short-term rates, supporting banks’ margins. A benign rate environment is expected, with potential rate cuts by RBI from Q4FY24 onwards, contingent on data-driven factors.
