Recent Events
ASSOCHAM & EGROW 26th SMPC on Feb 3, 2023
Key Takeaways
- India is in a relative "bright spot" in the world economy,
- The WPI and CPI both have come down to be in the tolerance range of the RBI.
- There is no macroeconomic narrative that established a causal relation between monetary tightening and inflation decline.
- The Rupee is coming under pressure again as rising commodity prices pressure the current account deficit (CAD), and the rotation of funds away from India creates funding pressures for India.
- The China reopening could challenge production in India.
- In the current EBLR regime, hikes by the RBI are being passed on by the banks to customers almost immediately, causing additional pressure on home buyers and industry, especially MSMEs.
- Liquidity in the banking system has tightened materially during FY23 and thus it should be eased in 2023-24.
