The Monetary Policy Committee (MPC) raised repo rate by 50 basis points to 5.4%, while continuing with its stance of “withdrawal of accommodation”. What was different in this policy from the previous policy, was the focus on the external sector as laid out by the Reserve Bank of India governor in his opening statement and during post-policy discussions. It is under immense scrutiny because of foreign portfolio investor (FPI) outflows aggregating to $35 billion since October 2021, and ever-rising trade deficit which increased to $31 billion in July, the highest on-record. So, how do we see growth, inflation and interest rates from here?
