Editor's Take | RBI monetary policy positive for borrowers, could mean more consumption

After 6 consecutive rate hikes, the Monetary Policy Committee has decided to hit pause much to the surprise of economists and market watchers. But, the RBI governor Shaktikanta Das was quick to add that this is merely a pause and not a pivot.

Citizens Monetary Policy on CNBC-TV18 had voted with a very narrow 3:2, with the chairman casting the casting vote, saying that I think the RBI should pause, but I have a feeling they are going to hike. So the market was in that sense divided, though our CNBC-TV18 Poll of Economists had indicated that it's a 90 percent factoring in of rate hike.

First of all, this is very positive for borrowers. Once you know that this is the worst it can get, then people who are planning to buy a car or a house perhaps will quicken that decision because no one knows exactly what is the downside or what is the amount of the EMI, there will be no nasty shock in terms of an EMI at least for the foreseeable future, another cycle can always start much later.

Normally, when people call a pause, economists do that or other the policymakers do that, because growth is getting impacted. Now here the surprise is they have actually upped the growth forecast, though, of course, they made it very clear the growth is still lower than last year. Last year, that is FY23 was 7 percent. This year it is going to be 6.50 percent, but their earlier forecast was 6.4.

The RBI seems to have factored in lower crude prices. Although at the moment OPEC has ensured that market prices are higher. The Reserve Bank's annual average for FY23 was $95. Their expected annual average for the current year is $85. So that is one reason why they are expecting the growth may be a little higher. And then, of course, services exporters and other positive they pointed out.

The inflation forecast for the fourth quarter is a big surprise. Surprise in the sense, last time when they forecast for January, February, and March, they said it would be 5.6. Now they brought it down to 5.2. Totally arithmetic, because in the Q4 that just went by, there was a very high, ugly surprise in inflation. Because of that base effect, they have brought down the Q4 inflation's total arithmetic and it looks like that is one good reason to pause. If the terminal inflation for the year is 5.2, then 6.50 is a good 130 basis points of the positive real rate.

What is the real takeaway for the market, they are happy that at the moment this growth gets a little bit of a leg-up because the cost of capital doesn't arise.

Economists whom CNBC-TV18 spoke to are not raising their growth forecast and are not changing their inflation forecast. The other of course outlier point is that one can take a loan via UPI which I think is another equally important decision. It might take away a little bit of business from credit cards.