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Below is quote on MPC announcement by Mr. Prashant Pimple, Chief Investment Officer - Debt, JM Financial Asset Management Limited announcement. 

“Inflation a major concern”

The policy was on expected lines except for inflation forecast which is slightly on a higher side. RBI hiked repo by 50 bps to 4.90% leaving CRR unchanged. Inflation for FY '23 has been forecast at 6.70% against earlier forecast of 5.70%, keeping in mind the risk emanating from the ongoing geopolitical conflict and subsequent impact on food and fuel. RBI kept the GDP forecast flat at 7.20% for FY '23 sighting buoyancy in rural demand. RBI further firmed its stance of withdrawal of accommodation till liquidity conditions normalise. Probably, RBI refrained from any liquidity move in this policy as systemic liquidity has already reduced in light of its previous measures. Yields cooled down a bit tracking the policy, which is more or less on expected lines. We expect rate hikes to continue in FY '23 with yields in general having an upward bias.

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