MPC provides stimulus noting receding inflation risks

In a first, MPC did not refer to the second round effects through demand conditions from HRA hike

The monetary policy committee (MPC) delivered a 25-basis point cut in the repo rate to six per cent, as was largely expected. Of the six members, five including Governor Urjit Patel, voted for a cut, while one member voted for a status quo. The stance on the policy remains neutral, indicating caution.

The statement acknowledged upside risks to the RBI’s inflation target of 4 per cent seen over earlier meetings, have either receded or have not materialised. That is evident from the fact that core inflation has been easing for the past three months. The new baseline inflation projection puts headline