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RBI Monetary Policy Minutes : 6 - 8th February 2024

On the India Front, RBI released the minutes of the monetary policy meeting Feb 8, 2024. 

The minutes offered nothing new and centered on the themes of demonstrated Growth Resilience despite the Global Headwinds seen, Improving Global growth outlook, Food price inflation continues to weigh, Fiscal discipline and quality of Government expenditure non-inflationary , geopolitical concerns pose risks , Challenges to achieving the last mile of inflation targets, markets are front running Central Banks in pricing the extent of accommodation in the year ahead and any premature moves could undermine the success achieved so far, favorable monsoon holds the key. Additionally, resilient growth gives the legroom to wait and allow complete monetary policy transmission.

Aashima Goyal made an interesting point on the liquidity: in light of elevated real rates measures to ensure WACR stays near the repo rate are required. She recommended active management of government cash balance is needed to save interest costs.

Prof Jayanth Verma was a lone wolf advocating a rate cut on the argument noting that concerns around overheating of the economy are misplaced as potential growth rate of the economy has increased due to digitization, tax reforms and step up in infrastructure investment and a high real rate could debilitate the process.

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