The monetary policy committee (MPC) of the Reserve Bank of India (RBI)will announce its decision on rates on Wednesday — with the focus on whether more members of the monetary policy committee (MPC) are in favour of slowing down the extent of rate hikes.

The markets have largely discounted a 35-basis point increase in the policy repo rate. While the RBI is not expected to make any major changes to its growth and inflation forecasts, a key factor to be watched is its tone on the interest rate trajectory ahead.

This comes because of worries that the Indian economy may be staring at slow down amid recession fears in some countries. On the other hand, though the threat of inflation which is still above the RBI’s upper bound of 6per cent is seen as receding, it is felt that this will be a long-drawn process.

At the last meeting, two members of the interest rate-setting panel had cautioned about aggressive rate increases, though five members, barring Ashima Goyal (who batted for 35 basis points) had opted for a 50-basis point rise. It is felt this split could rise in the current meeting.

"The possibility of an MPCsplit (5-1 or even 4-2) in the upcoming meeting is not ruled out. We note that the September 2022 vote was split 5-1, in favour of a 50-basis point hike,” Madhavi Arora andHarshal Arora, economists atEmkay, said in a note.

Stocks slip

The benchmark indices settled in the red for the third consecutive session as investors awaited the MPC decision.

While the 30-share BSE benchmark ended 208.24points lower at 62626.36 after crashing 444.53 points to62390.07 during intra-daytrades, the broader NSE Nifty declined 58.30 points to end at18642.75.

The rupee declined 77 paise to close at over one-month low of 82.62 against the dollar on Tuesday due to heavy selling pressure in domestic equities and rising crude prices.