Festive season trends, Q2 GDP growth will set the stage for policy stance

We remain cautious that reviving demand could embolden pricing power, allowing a faster transmission of the supply-side pressures to core inflation

Given the conflicting signals on the inflation outlook amid a gradually strengthening economic recovery, the October 2021 review of the Monetary Policy Committee (MPC), as well as the accompanying announcements of the Reserve Bank of India (RBI) were on expected lines. 

The MPC unanimously maintained a status quo on the repo rate, and kept the monetary policy stance accommodative with a vote of 5:1, in line with the split seen in the August 2021 meeting. As expected, the RBI refrained from hiking the reverse repo rate without having adequately prepared the markets for the same. However, it took a further step