RBI MPC Jun meeting preview – Committee likely to cut rates by 25 bps, tweaks to liquidity management watched The Reserve Bank of India’s monetary policy committee shall announce the resolution of the Jun meeting outcome this Friday. We expect the committee to cut policy rates by 25 bps, while retaining the accommodative policy stance. Most market participants have already priced in a 25-bps rate cut this week’s meeting. Any potential tweaks to the liquidity management or revision in guidance will be closely watched. A quick review of macros since the Apr MPC meeting: India Q4 GVA growth came in at 6.77% vs 6.5% previous – aided by higher positive contribution to growth from manufacturing as well as construction activity. The real GDP growth came in sharply higher at 7.4% vs ~6.6% expected, with strong growth in gross fixed capital, though private consumption was soft (despite falling inflation as well as inflation expectations). The wedge between GVA and GDP can be explained by a sharp rise in net indirect taxes (indirect taxes net subsidies).
