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Perspective on RBI MPC rate hike by Mr. Motilal Oswal, MD & CEO, Motilal Oswal Financial Services Ltd

“RBI in its latest MPC meeting has hiked the repo rate by 50bps to 5.4% - levels which was seen before the Covid-19 pandemic. The Central Bank raised the interest rate for the 3rd consecutive month since May’22 by cumulatively 140 bps in its effort to contain inflation. Despite this sharp hike, RBI expects the inflation to remain above its comfort zone and has retained its CPI inflation forecast at 6.7% for FY23. RBI expects India’s GDP growth to remain strong at 7.2% in FY23.

We believe,  the commodity prices have cooled off including crude oil, the inflation may be peaking out.  We expect RBI may not be very aggressive in its subsequent policy meets and being more data driven based on inflation numbers.”

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