StanChart says RBI must pause rate cuts after strong GDP data

Core Viewpoint - The Reserve Bank of India (RBI) is expected to maintain a pause on interest rate cuts due to high growth rates and low inflation, despite some expectations for a rate cut [1][2][9] Group 1: Rate Cut Expectations - There is a general expectation among economists for a rate cut, but the RBI's recent actions and statements suggest a cautious approach [2][6] - The RBI has already implemented 100 basis points of rate cuts since the beginning of the financial year, making further cuts challenging given the current growth rate of 8% [2][9] - A potential 25 basis points rate cut could hinder the transmission of monetary policy, as market behavior may react negatively to such a move [3][4] Group 2: Focus on Liquidity - The emphasis should be on liquidity injection rather than further rate reductions, as liquidity has significantly decreased due to RBI interventions in the foreign exchange market [5][8] - The RBI's forward-looking stance indicates that inflation is expected to approach 4% by June of the next fiscal year, suggesting that rates may remain on hold for the time being [9]