“The RBI’s decision of bringing about the fourth straight increase in the repo rate in the current cycle was in line with market expectations. The 50bps repo rate hike comes on the back of persistence of high inflation and the continued upside risks. The tone of the policy continues to remain hawkish and is expect to stay unchanged to ensure a stable policy rate, especially with the current global tightening. At some point RBI has to be cognizant of the fact that targeting inflation will slow down growth especially in the infrastructure field. This inflation is due to disruption caused by war and energy rates are already coming down. The domestic economic activities are resilient and have picked up. Some green offshoots are visible in urban demand and rural market is also catching up. Exports recorded a growth of 24.5 per cent during April-June 2022, indicating strengthening domestic demand.”
