Guwahati, Dec 7: The RBI made some policy announcement on Wednesday which was in line with expectations in terms of raising the policy rate by 35bps and keeping the policy stance unchanged. The central bank also emphasised that it is not ready to let up its inflation battle and aims to bring down inflation below 6% in the near term and then closer to 4% over the medium term.
Today’s policy announcement does provide soft support for the rupee ahead of the Fed meeting next week and can be viewed perhaps as an attempt by the RBI to continue aligning itself with the still hawkish G7 central banks. Furthermore, the RBI’s continued emphasis on the factors that lend support to the rupee, signals its preference for a stable rupee going forward implying intervention on both sides of the market to keep its range bound into 2023.
In terms of forecasts, GDP growth was revised down marginally by 20bps to 6.8% for FY23, although the central bank showed comfort around the current growth momentum. On inflation, the full-year figures were kept unchanged at 6.7%. All in all, the policy announcement on Wednesday signalled that more rate hikes are in the offing.