 "Repo rate hike to liquidity surplus, here're the key parameters of RBI MPC")
A 40 bps repo rate hike, along with 50 bps hike in CRR, comes after CPI inflation in March shot up close to 7%. As per RBI's own estimate, inflation may remain elevated in the coming months and there are risks that inflation overshoots MPC's projection. The MPC is faced with the grim prospect of missing its inflation mandate - which is to maintain average inflation between 2-6% for three consecutive quarters.
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