MONETARY POLICY RBI on pause, indicates smaller and slower rate cuts: :: Kotak Securities PDF Link

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MONETARY POLICY
RBI on pause, indicates smaller and slower rate cuts next fiscal …
RBI retained status quo on rates, as expected. However, policy language indicates
growing tolerance of RBI towards slower growth choosing to retain its focus over inflation ("…notwithstanding the deceleration in growth, inflation risks remain, which
will influence both the timing and magnitude of future rate actions…"). We opine
going forward the rate cuts are likely to be smaller and slower in next fiscal year
dependent on trilogy of inflation, growth and external front.

On another front, in economic survey, government seems more sanguine towards
growth and deficit, expecting GDP growth  of 7.6% in FY13 and 8.6 in FY14. We
opine that GDP growth target may be achievable but only with hard policy actions
including crucial reforms.
Monetary/Liquidity Measures Announced
n No change in CRR; remains at 4.75%
n No change in policy repo rate; remains at 8.5%
n Reverse repo remains at 7.5% (100 bps below repo rate);
n MSF rate at 9.5% (100 bps above repo rate)