The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as no surprise given the recent sharp drop in inflation. The central bank continues to strike a hawkish tone and the door remains ajar for further hikes. But with headline inflation set to remain within the RBI’s 2-6% target range for the foreseeable future, the next move in policy rates is likely to be down. We think rate cuts could commence from early 2024.
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