Cost of Capital In India 5th Edition

The minutes of the August 2022 Monitory Policy Committee Meeting highlighted the need for continued rate hike to ensure monetary policy credibility. Members noted that while inflation may have peaked, significant uncertainties, and upside risks warrant further rate hikes to anchor inflation expectations. Members were wary of near-term upside risks to inflation stemming from (1) INR depreciation, (2) rise in GST rates, and (3) uneven distribution of the southwest monsoon.

With the MPC expected to continue with rate hikes, it is needless to mention that such hawkish impulse will continue to be felt both in the debt and the equity markets; resulting in a upside risk to Cost of Capital in India.