If inflation continues to soften, PMC will likely feel more comfortable moving into a long pause next quarter: Bandhan Bank

“The MPC’s decision to hike the repo rate by another 25 basis points to 6.50 percent was in line with market expectation. It was a close call in the current round to choose between a pause and a 25 basis point hike, as reflected in the MPC voting pattern with two of the six member committee voting for a pause. While the voting pattern turned more diverse than usual, it is clear that the MPC’s action will be more dependent on data - both domestic and global - in the coming months. The RBI will likely stay in search of more decisive signs of a sustained disinflation in the coming months. On the other hand, if inflation indeed continues to soften in line with the RBI’s current expectation, the MPC will likely feel more comfortable moving into a long pause in the next quarter,” said Siddhartha Sanyal, Chief Economist & Head Research, Bandhan Bank.