Commenting on the RBI policy Sakshi Gupta, Principal Economist, HDFC Bank has said that, The RBI and government today delivered on a coordinated effort towards shoring up capital flows into Indian assets to ease the pressure on the rupee. These measures were a mix of both short-term fixes as well as broader structural reforms such as the change in taxation on FPI investments in g-secs. The combined impact of these could help bridge the $40-50 billion gap in the balance of payments that we had estimated for FY27. We see an appreciation bias likely for the rupee over the coming months as the actual flows on account of these measures start trickling in.
The policy announcement was also notable in its assessment of growth and inflation. The central bank recognised the downside risks to growth due to supply chain disruptions and increase in price pressures. At the same time, the policy could be assessed as slightly hawkish given the 50bps upward revision in the inflation forecast to 5.1% for FY27. This raises the likelihood of the rate hike cycle beginning by the October policy. We estimate a cumulative 50bps rate increase in FY27.