An expected pause, amid green shoots

As expected the Monetary Policy Committee (MPC) of Reserve Bank of India took a pause from rate cuts and maintained the repo rate at 5.25 per cent. This decision comes after an aggregate 125 basis point cut over the past year.

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The MPC took note of successful completion of trade deals and said it augurs well for the economic outlook.

Merchandise exports will get a boost from the prospective trade deal with the US, while landmark comprehensive trade pact with the European Union coupled with trade deals with New Zealand and Oman should help diversify exports and strengthen the external sector, it said.

MPC also sounded optimistic on the domestic front both on private consumption and investment activity and noted that near-term domestic inflation and growth outlook remain positive.

While maintaining a neutral stance, the MPC said headwinds still purists from geopolitical tensions, uncertain global trade environment.

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