In the MPC’s assessment, inflation will likely rise from current levels in the rest of the year, with farm loan waivers and the implementations of pay and allowance revisions by states a la the centre posing upside risks. The MPC also pensively expressed concern about the spectres of geopolitical tensions and imminent normalisation of systemic central bank balance sheets that loomed over the outlook.
On food inflation, the MPC’s prognosis was more sanguine though, with adequate foodstocks and supply management efforts seen as mitigating factors. On growth, the MPC regarded the first estimates of kharif production – which were lower than last year’s level and the target for this year – and the GST rollout as early but transitory setbacks.