RBI maintains status quo; guidance leaves room for further rate cuts - ICICI Bank : Treasury Research

The RBI kept the repo rate and CRR unchanged at 7.25% and 4% respectively in the mid-quarter review today.

Policy guidance is relatively less cautious compared to the May meeting. The RBI believes that "It is only a durable receding of inflation that will open up the space for monetary policy to continue to address risks to growth" as compared to prior policy statements highlighting the limited room for policy easing.

The Central Bank remains vigilant regarding the global uncertainty, rapid shift in risk perceptions and its impact on capital flows.

The RBI would closely watch the Rupee market moves, progress in the monsoons, MSP hike quantum along with June trade deficit and inflation prints ahead of the July 30th review.

We continue to maintain our call of 50 bps additional repo rate cut in balance FY2014 with a 25 bps cut in the July meeting.

Source : Equity Bulls

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