Rates unchanged (vs. wide consensus of 25bps cut): This came as a negative surprise. Also, kept growth estimates same (GDP 7.3%, Infl 6.5%). Headline inflation remain above levels of RBI, retail inflation on uptrend (even if core inflation has trended down), frontloaded policy rate cut in April with 50bps, but nothing done on supply side and more factors than rates contribute to investment slowdown.
RBI would want the government to act on oil prices and investment climate to make environment more growth conducive. Falling OIL prices surely get offset by weak INR, but still could make case for rate cuts going fwd.
With imp changes in Delhi, a new FM can create some positive activity along with moderated OIL prices. Growth numbers will remain very weak for next few data releases. These would be an important criteria for RBI in its next meet on July 31st (odds will keep on rising for a rate cut then).
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