According to experts, the Reserve Bank of India (RBI) is likely to keep the repo rate unchanged at 6.5% in its upcoming monetary policy review on August 8-10. This is because inflation remains a concern, despite some moderation in recent months.
The Consumer Price Index (CPI) inflation rate stood at 7.01% in May 2023, which is above the RBI's target of 4%. While inflation is expected to moderate in the coming months, it is still likely to remain above the RBI's target for some time.
In addition, the RBI is also concerned about the impact of the ongoing war in Ukraine on the Indian economy. The war has led to a sharp increase in global commodity prices, which is putting pressure on inflation in India.
Given these factors, it is likely that the RBI will keep the repo rate unchanged in its upcoming policy review. However, the RBI may signal that it is prepared to raise rates in the future if inflation does not moderate as expected.
Here are some of the factors that could influence the RBI's decision on the repo rate:
- The inflation outlook: If inflation continues to remain above the RBI's target, the central bank may be more inclined to raise rates.
- The global economic outlook: If the global economy weakens, the RBI may be less inclined to raise rates, as this could hurt economic growth.
- The domestic economic outlook: If the domestic economy grows faster than expected, the RBI may be more inclined to raise rates, as this could help to prevent inflation from rising further.
Ultimately, the RBI's decision on the repo rate will be based on a careful assessment of all of these factors.
Post a Comment