The Reserve Bank of India has kept its key policy rates and stance unchanged, in line with expectations, as it continues to assess evolving macroeconomic conditions. Commenting on the development, Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, stated that recent regulatory measures aimed at restricting offshore speculative activity, along with the de-escalation of geopolitical tensions, have provided some relief to the Indian rupee.
She noted that the current environment offers the RBI an opportunity to evaluate the sustained impact on growth and inflation dynamics, as well as the persistence of the balance of payments (BOP) deficit. Bhardwaj further emphasised that the central bank is expected to adopt a data-dependent approach going forward, given the fluid nature of the economic landscape.
On liquidity management, Bhardwaj indicated that the RBI is likely to closely monitor conditions and may introduce Variable Rate Reverse Repo (VRRR) operations. Such measures would help ensure that overnight rates gradually move higher within the policy corridor, between the repo rate and the marginal standing facility (MSF) rate.
