The Reserve Bank of India (RBI) yesterday raised key interest rates by 90 basis points, to 4.90 percent. August 3-5 is the next MPC meeting
According to a report by a global information service provider, S&P Global Market Intelligence, it is anticipated that the Reserve Bank of India (RBI) will raise the repo rate by 35 basis points at its upcoming monetary policy meeting. This will be done in accordance with the prevalent trend of tightening monetary policy in an effort to reduce the rate of inflation.
This is the sixth consecutive month that India’s retail inflation has been higher than the upper tolerance limit of 6% set by the Reserve Bank of India. Â In June, retail inflation was 7.01 percent. On the other hand, according to the Wholesale Price Index (WPI), India’s inflation rate has been in the double-digit range for the last 15 consecutive months.
Due to the interruption in the global supply chain brought on by the Russia-Ukraine war, the price of crude oil and other critical commodities has increased, contributing to the ongoing inflation. In the United States, inflation reached 9.1% in June, the highest level seen there since the beginning of the 1980s. The Federal Reserve in the United States has recently tightened monetary policy in response to inflation that is getting closer to reaching double digits.
After the Federal Reserve increased interest rates by 75 basis points the previous week, markets in the United States will be keenly expecting the non-farm payroll figures, which will help shape the next course of action taken by the Fed. “The latest number is likely to come in around the mark of 260k (down from 372k),” stated the worldwide information service provider. The RBI is now anticipating a slowdown in the rate of job increases, and the latest figure is expected to come in around the mark.
To deal with rising inflation, the Monetary Policy Committee has raised key interest rates by 90 basis points in two tranches since May, raising them to 4.90 percent from the historic low of 4 percent, as it seeks to rein in inflation, which has consistently remained above the central bank’s safety zone of 4-6 percent. The MPC of RBI will meet on August 3 and 5 to deliberate on fresh interest rates.
