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Perspective on the RBI MPC announcement in September By Mr. Mohit Ralhan,  CEO , TIW Capital

“The 50 bps hike in the repo rate by RBI is along the expected lines. RBI has to not only look at domestic inflation but also consider the policy actions of the US Fed. The current environment is quite challenging for emerging markets with the rising price of energy and agricultural commodities, currency depreciation, ongoing military conflicts and the looming threat of global recession. Although India is relatively doing better, it can’t remain insulated for long enough. RBI has the herculean task of balancing growth, inflation and the value of INR. It has done quite well on the inflation front with inflation in Q3 expected to be at 6.5% even if oil reaches the price of USD 100/barrel. Inflation is expected to go down to below 6% in Q4. INR has depreciated against the US dollar as all other major currencies and here also the depreciation in INR is lower than most of the major currencies. Also, the growth forecast for India at 7% still remains quite good. Right now, the domestic situation looks under control but risks are rising.”

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