Dr Sachchidanand Shukla, Chief Economist, Mahindra and Mahindra
“RBI’s MPC is expected to hike the repo rate by 40 bps in the upcoming policy meeting as inflation prints continue to remain above MPC’s comfort level for six consecutive months. After US Fed has hiked its policy rate by 75 bps in its latest policy meet, RBI is expected to hike rate for the third time this year. However, MPC may go slow on the hiking as recent prints suggest softening of the inflationary pressures. With the easing of global commodity prices, CPI inflation seems to have broadly peaked at the current levels and is expected to witness a downward movement. As a result, we expect CPI prints to average around 6% by Q4-FY23. CRR is likely to be left unchanged in this policy meet as surplus liquidity hovers around 1.5% of the NDTL mark. However, liquidity will remain constrained around current levels owing to a drawdown of forex reserves amid global pressures, a pick-up in government spending and higher credit growth. Credit growth has remained in double digits in the past couple of months. With the ongoing economic recovery, we expect GDP growth to average 7-7.2% and inflation at 6.6% in FY23.”
