Despite outsized increases in interest rates across the world, inflation remains above the central banks’ comfort levels. Accordingly, the central banks are likely to continue to focus on “calibrated” tightening. High-frequency indicators for the domestic economy suggest sustained momentum; however, we remain cautious of demand remaining robust in FY24 owing to a weaker global economy and uneven recovery in employment. The fiscal policy remains conducive to growth with the budget’s continued focus on investment led growth strategy. Meanwhile, with core inflation remaining persistently at elevated levels, the possibility for another rate hike has increased in the April policy meeting.
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