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Directions: In the given question, an inference is given in bold which is then followed by three statements. You have to find the statement(s) from where it is inferred-Choose the option with the best possible outcome as your choice.

Rate cut is decided on the basis of growth rate.

(I) As inflation had increased by two percentage points since the last policy ? although below the target of four per cent no one in the market seriously expected the inflation-targeting MPC to recommend any rate cut. On cue, the RBI kept the repo rate at the existing six per cent.

(II) It also increased its inflation forecast slightly to 4.2 to 4.6 per cent from 4 to 4.5 per cent for the second half of the year. But the central bank reduced the growth forecast for 2017-18 from 7.3 per cent to 6.7 per cent on the expectation that growth will pick up in the second half of the year.

(III) The reading of the policy and the exchanges in the RBI press conference do not create expectations of a rate cut in the next policy either, unless the trajectory of growth and inflation change dramatically. In fact, Governor Urjit Patel expressed concerns about fiscal slippages (States, Centre) and its impact on macroeconomic stability.

A)  Only (I)                       

B)  Both (I) and (III)           

C)  Only (III)             

D)    Only (II)

E)  Both (II) and (III)