“From the policy point, we see the RBI striking a dovish tone in the upcoming policy, post a healthy budget and largely comfortable global narrative. It will also fall short of any stance change (a close call). No material change in the assessment of macro variables is expected,” Emkay Global Financial Services in a report said.

It said that it has long maintained that the RBI's policy has been somewhat pegged to the Fed, specifically in the last two years, even as it formally targeted inflation.

“The swift turn of tone and action pivots of the RBI in the last two years have been influenced purely by global causes,” the report said.

The report added that amid fluid external dynamics, the policy prerogative has essentially been to ensure financial stability, even as the policy narrative has been domestic - implying the aim of financial stability may have even preceded inflation management in the last two years.

“Presently, a swift change in risk appetite and low volatility in risk assets has given a comfortable breathing space to EMs, including India, on offering higher risk premia,” the report said.

It added that the markets are assigning 60 per cent probability of the first Fed cut by May 24 and domestically, policy normalisation is seen by February 24, with one cut each in June 24 and October 24.

“Factors such as US inflation trends taking time to discern, economic resilience, and easier financial conditions feeding back into demand may be slowing any early move towards massive key DM central bank easing this year,” the report said.

It said that this should restrain the RBI from cutting early as well.

“As of now, we see the Fed not cutting before June 24, with the RBI following suit with a lag. We maintain that the RBI will not precede the Fed in any policy reversal in CY24,” the report added.