The Monetary Policy Committee decided to raise the policy rate by 300 basis points to 20 percent in its meeting today. his decision reflects deterioration in inflation outlook & its expectations amid recent external and fiscal adjustments. MPC believes this outlook warrants a strong policy response to anchor inflation expectations around the medium-term target of 5-7 percent.
MPC noted that reduction in CAD is important but requires concerted efforts to improve external situation.
It emphasized that any significant fiscal slippage would undermine monetary policy effectiveness in the context of achieving the price stability objective.
