“The MPC’s decision on Friday (December 8) to keep the key policy rates steady while staying the course on monetary tightening is the best policy prescription that the central bank could deliver at this point of time.
The tightening cycle, in my view, will continue till the headline inflation returns to the below 4% mark. For this to happen, we may have to wait for a few quarters more as food price inflation is listed as a major downward risk in the near term.
The point, however, to note here is that the past policy actions have started showing results as mirrored in the moderating core inflation print.
As economic expansion gathers momentum with the apex bank projecting the real GDP growth at 7% for the current fiscal, a full 50 bps up from its earlier forecast, it is only prudential for the central bank to continue its disinflationary stance. I don’t expect a rate cut on the RBI’s table any time soon”.