RBI: Policy outcome was considered hawkish - Westpac

According to Frances Cheung, Research Analyst at Westpac, the RBI kept its policy rate unchanged as expected, but the outcome was considered hawkish by the market.

Key Quotes

 “First, the vote was 5-1, instead of 4-2 as some had expected; Second, the RBI revised upward its inflation forecast despite the downward revisions to GDP growth. As long as the option of a fiscal stimulus package remains open, yields will face upward pressure, which may have an impact on USD/INR based on the increased correlations between USD/INR and India bond yield. We note these correlations fluctuate over time and do not reflect causality.”