RBI Monetary Policy Review — MPC Maintains Status Quo, Keeping Powder Dry: Dolat Capital Report

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

The RBI continues to preserve monetary space, keeping itself positioned to deliver a rate cut if required. Market participants expect that any policy action will be contingent on the evolving impact of GST rationalization on consumer demand and investment pickup.

Current dynamics, especially the recent move to a two-slab GST and the imposition of additional 25% tariffs on general goods and 100% on select pharma exports, are being closely monitored by the RBI, especially amid lingering geopolitical uncertainties and ongoing pressures in the US economy.

Domestic inflation remains well contained, with headline CPI averaging around 2.5%, core remains anchored near 4% and our food and fuel index even shows a deflation of 1.15% YoY in Sept-25; only a slight uptick in food prices is expected due to aboveaverage monsoon rainfall in some regions.

Going forward, due to unfavorable base effects, inflation could move upwards to 4% in H2 FY26. Growth indicators remain moderate, with IIP and core sector data reflecting a gradual but steady recovery led by infrastructure and capital goods.

Rural demand is stabilizing, as seen in positive tractor sales, while government capex continues to provide a strong boost. Liquidity remains comfortable, supported by a durable surplus and the upcoming phased CRR cuts. Credit growth at 9–10% is stable, though skewed more towards services and personal loans.

Monetary transmission remains efficient in the overnight market; however, public sector banks have lagged in passing on rate reductions to borrowers, while foreign banks have adjusted more swiftly across both deposit and lending rates.

Externally, merchandise exports have been resilient despite new tariffs, though labor-intensive sectors such as gems, textiles, and seafood are showing signs of stress.

Continued uncertainty on trade agreements may necessitate a more proactive RBI stance, especially as rupee depreciation offsets some adverse tariff effects, and further FPI outflows loom.

To summarise, the RBI’s approach remains data-driven and responsive, with future action contingent on policy clarity around GST rationalization and tariff transmission. With ample liquidity, subdued inflation, and fiscal support through GST reforms, growth remains well supported, even as global uncertainties linger.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.