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ICICI Securities Report
At the upcoming monetary policy review scheduled for August 04-06, we expect the monetary policy committee to keep repo rate unchanged at 4%.
The committee continues to face a tightrope walk between controlling inflation and supporting growth.
Similar to the past few policy reviews, we expect the MPC to continue prioritising supporting growth over checking inflation. This is because-
while some high-frequency indicators are showing good momentum, recovery is still assessed to be nascent and fragile and
a third wave of Covid-19 is likely to hit the country beginning September 2021 and peaking in October 2021.
Hence, given the fragile nature of recovery and uncertain outlook, we expect the MPC to maintain status quo on rates.
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