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NEW DELHI: Though global growth outlook has improved in recent months, it is expected to decelerate during 2023, said the RBI's rate setting monetary policy committee (MPC), which, in its meeting on February 8, had raised the repo rate by 25 basis points to 6.50 per cent with immediate effect.

The six-member panel decided to hike the repo rate by a mandate of four in favour (including RBI Governor Shaktikanta Das) while two were against it.

According to the minutes of the MPC meeting, it was felt that the outlook on global growth has improved in recent months, despite the persistence of geopolitical hostilities and the impact of monetary policy tightening by central banks across the world.

Inflation globally is exhibiting some softening from elevated levels, prompting central banks to moderate the size and pace of rate actions, the members felt.

"However, central banks are reiterating their commitment to bring down inflation close to their targets. Bond yields remain volatile. The US dollar has come off its recent peak, and equity markets have moved higher since the last MPC meeting," the minutes said.

Weak external demand in major advanced economies (AEs), the rising incidence of protectionist policies, volatile capital flows and debt distress could, however, weigh adversely on prospects for emerging market economies (EMEs), the committee noted.

On the domestic economy, the committee noted that demand has been sustained by strong discretionary spending.

"Urban demand exhibited resilience as reflected in healthy passenger vehicle sales and domestic air passenger traffic," it said.

Rural demand is improving and investment activity is gradually gaining ground, the minutes said.