diff --git a/src/inter.c b/src/inter.c
index 71e2d471..173f07bb 100644
--- a/src/inter.c
+++ b/src/inter.c
@@ -1460,6 +1460,12 @@ void kvz_hmvp_add_mv(const encoder_state_t* const state, uint32_t pic_x, uint32_
   }
 }
 
+static void round_avg_mv(int16_t* mvx, int16_t* mvy, int nShift)
+{
+  const int nOffset = 1 << (nShift - 1);
+  *mvx = (*mvx + nOffset - (*mvx >= 0)) >> nShift;
+  *mvy = (*mvy + nOffset - (*mvy >= 0)) >> nShift;
+}
 
 /**
  * \brief Get merge predictions for current block
@@ -1591,7 +1597,9 @@ uint8_t kvz_inter_get_merge_cand(const encoder_state_t * const state,
     }
   }
 
-  if (candidates != max_num_cands - 1) {
+  if (candidates == max_num_cands) return candidates;
+
+  if (0 && candidates != max_num_cands - 1) {
     const uint32_t ctu_row = (y >> LOG2_LCU_WIDTH);
     const uint32_t ctu_row_mul_five = ctu_row * MAX_NUM_HMVP_CANDS;
     int32_t num_cand = state->frame->hmvp_size[ctu_row];
@@ -1611,11 +1619,82 @@ uint8_t kvz_inter_get_merge_cand(const encoder_state_t * const state,
           mv_cand[candidates].ref[1] = state->frame->hmvp_lut[ctu_row_mul_five + i].inter.mv_ref[1];
         }
         candidates++;
-        if (candidates == max_num_cands) return candidates;
+        if (candidates == max_num_cands - 1) break;
       }
     }
   }
 
+
+
+  // pairwise-average candidates
+  if (candidates > 1 && candidates < max_num_cands)
+  {
+    // calculate average MV for L0 and L1 seperately
+    uint8_t inter_dir = 0;
+
+    for (int reflist = 0; reflist < (state->frame->slicetype == KVZ_SLICE_B ? 2 : 1); reflist++)
+    {
+      const int16_t ref_i = mv_cand[0].dir & (reflist + 1) ? mv_cand[0].ref[reflist] : -1;
+      const int16_t ref_j = mv_cand[1].dir & (reflist + 1) ? mv_cand[1].ref[reflist] : -1;
+
+      // both MVs are invalid, skip
+      if ((ref_i == -1) && (ref_j == -1))
+      {
+        continue;
+      }
+
+      inter_dir += 1 << reflist;
+      // both MVs are valid, average these two MVs
+      if ((ref_i != -1) && (ref_j != -1))
+      {
+        int16_t mv_i[2] = { mv_cand[0].mv[reflist][0], mv_cand[0].mv[reflist][1] };
+        int16_t mv_j[2] = { mv_cand[1].mv[reflist][0], mv_cand[1].mv[reflist][1] };
+
+        // average two MVs
+        int16_t avg_mv[2] = { (mv_i[0] + mv_j[0]) * 2, (mv_i[1] + mv_j[1]) * 2 };
+        
+        round_avg_mv(&avg_mv[0], &avg_mv[1], 1);
+
+        if (avg_mv[0] & 1 || avg_mv[1] & 1) {
+          mv_cand[candidates].half_pel = true;
+        } else {
+          avg_mv[0] = avg_mv[0] >> 1;
+          avg_mv[1] = avg_mv[1] >> 1;
+        }
+
+        mv_cand[candidates].mv[reflist][0] = avg_mv[0];
+        mv_cand[candidates].mv[reflist][1] = avg_mv[1];
+        mv_cand[candidates].ref[reflist] = ref_i;
+      }
+      // only one MV is valid, take the only one MV
+      else if (ref_i != -1)
+      {
+        int16_t mv_i[2] = { mv_cand[0].mv[reflist][0], mv_cand[0].mv[reflist][1] };
+
+        mv_cand[candidates].mv[reflist][0] = mv_i[0];
+        mv_cand[candidates].mv[reflist][1] = mv_i[1];
+        mv_cand[candidates].ref[reflist] = ref_i;
+      }
+      else if (ref_j != -1)
+      {
+        int16_t mv_j[2] = { mv_cand[1].mv[reflist][0], mv_cand[1].mv[reflist][1] };
+
+        mv_cand[candidates].mv[reflist][0] = mv_j[0];
+        mv_cand[candidates].mv[reflist][1] = mv_j[1];
+        mv_cand[candidates].ref[reflist] = ref_j;
+      }
+    }
+
+    mv_cand[candidates].dir = inter_dir;
+    if (inter_dir > 0)
+    {
+      candidates++;
+    }
+  }
+
+  if (candidates == max_num_cands) return candidates;  
+
+
   int num_ref = state->frame->ref->used_size;
 
   if (candidates < max_num_cands && state->frame->slicetype == KVZ_SLICE_B) {
diff --git a/src/inter.h b/src/inter.h
index 7d9b9643..b3d333f6 100644
--- a/src/inter.h
+++ b/src/inter.h
@@ -34,11 +34,13 @@
 
 
 typedef struct {
-  uint8_t dir;
-  uint8_t ref[2]; // index to L0/L1
   int16_t mv[2][2];
   uint16_t mer[2];
+  uint8_t dir;
+  uint8_t ref[2]; // index to L0/L1
 
+  /// \brief Flag for half-pel mv, otherwise mv is full-pel
+  bool half_pel; 
 } inter_merge_cand_t;
 
 void kvz_inter_recon_cu(const encoder_state_t * const state,
diff --git a/src/search_inter.c b/src/search_inter.c
index dd76adee..6d611ae2 100644
--- a/src/search_inter.c
+++ b/src/search_inter.c
@@ -1675,9 +1675,9 @@ static void search_pu_inter(encoder_state_t * const state,
   int num_rdo_cands = 0;
 
   // Check motion vector constraints and perform rough search
-  for (int merge_idx = 0; merge_idx < info.num_merge_cand; ++merge_idx) {
-
+  for (int merge_idx = 0; merge_idx < info.num_merge_cand; ++merge_idx) {    
     inter_merge_cand_t *cur_cand = &info.merge_cand[merge_idx];
+    if (cur_cand->half_pel) continue; // Skip half-pel candidates for now TODO: Fix
     cur_cu->inter.mv_dir = cur_cand->dir;
     cur_cu->inter.mv_ref[0] = cur_cand->ref[0];
     cur_cu->inter.mv_ref[1] = cur_cand->ref[1];