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Below is Comment on RBI MPC Announcement  by Mr. Mohit Ralhan, Managing Partner at TIW Capital Group

“RBI has maintained the accommodative stance amidst an increase in inflation forecast to 5.7% in FY23 from 4.5%. There was also a downward revision in GDP growth forecast to 7.2% in FY-23 from 7.8%. It’s a tricky scenario with challenges on the global economic front led by Russia – Ukraine conflict, rise in energy prices and lingering risk on new variants of COVID. The rising price of crude oil has been a major contributor to inflation and if its price sustains above US$ 100 per barrel, then inflation will likely pose a greater challenge. Global food price is another key parameter to watch. The restoration of LAF width to 50 bps is an indication that RBI is looking to gradually shift away from high liquidity scenario. Overall, the domestic economy looks in good shape with a sustainable current account deficit and high forex reserves. The trend in global commodity prices will be the key to any likely change in policy rates from here on.”

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