MPC members focused on the deterioration of the projected growth-inflation balance in FY23 (with forecast for GDP growth getting downgraded by 60 bps to 7.2% and that of CPI inflation getting revised up by 120 bps to 5.7%). However, with risk assessment being asymmetrically skewed towards inflation, the entire MPC felt the need for kickstarting the process of withdrawal of post pandemic monetary accommodation.
The curbing of liquidity surplus by the RBI, which has been progressing at a gradual pace since H2 FY22 found in-principle support from MPC members. The calibration of liquidity surplus and the normalization of the width of the policy rate corridor were viewed as complementary steps to signal focus on inflation management without taking any harsh step on curtailing overall growth momentum.
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