RBI may take a more balanced stance in June

Core CPI has softened materially to less than 4.5%

The Reserve Bank of India (RBI) will likely keep the key policy rates unchanged in June and might maintain its “neutral” monetary policy stance. While a neutral policy stance does not preclude the RBI from changing the repo rate in either direction, the bias of the Monetary Policy Committee (MPC) seems to be to keep rates on hold in the near-term, given their explicit change in monetary policy stance as late as in February. However, the MPC is expected to adopt a more balanced rhetoric in June compared to their hitherto markedly cautious tone in 2017.

India’s domestic macroeconomic backdrop clearly