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Below Quote on MPC By Kunal Valia, Chief Investment Officer - Listed Investments, Waterfield Advisors

“RBI hiked the Repo rate by 50 bps to 5.9% in-line with expectation. Consequently, the standing deposit facility (SDF) rate is adjusted to 5.65% and the marginal standing facility (MSF) rate and the Bank Rate to 6.15%.

In the MPC’s view, inflation is likely to be above the upper tolerance level of 6% with core inflation remaining high. The outlook is fraught with considerable uncertainty, given the volatile geopolitical situation, global financial market volatility and supply disruptions. Meanwhile, domestic economic activity is holding up well and is expected to be buoyant in H2:2022-23, supported by festive season demand amidst consumer and business optimism. The MPC is of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored. 5 out of 6 MPC Members voted for the rate hike and further opined on withdrawal of policy accommodation given the adverse volatility in developed nations and inflation above target. The MPC lowered the GDP growth forecast to 7% from 7.2% with risks broadly balanced. Inflation expected to remain elevated at around 6% in the second half of FY23 as per the MPC. “

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