You need to use a 1 1/4" hole saw. The only trouble is that stainless is difficult to drill because it dulls bits quickly. You'll want to invest in a good quality hole saw (or several cheap ones).

Use a center punch to mark your starting point and use the hole saw on a very low speed (maybe 350 rpm). Depending on the hole saw you may not be able to get through 1 3/4". So using the same size drill bit as the pilot bit of the hole saw, drill all the saw through. Then finish the hole from the underside of the counter top.

A hole saw with grit for the cutting edge will get through the metal in short order.

Then switch to a regular toothed cutter for the MDF.

When cutting stainless sheet whether you use a drill bit or a hole saw, the key is to go slow. If you are using a variable speed drill, slow it down as far as it will go and use some oil for a lubricant. Just a tad of motor oil will work fine.