RBI's Monetary Policy Dilemma Amid Inflation and Global Unrest
The Reserve Bank of India's reconstituted Monetary Policy Committee deliberates on interest rates amid inflation worries and Middle East tensions. While the repo rate remains unchanged at 6.5%, experts predict easing by December. The government's inflation mandate and global factors weigh heavily on the decision.
- Country:
- India
The Reserve Bank of India's newly reconstituted Monetary Policy Committee (MPC) has begun discussions on its latest bi-monthly monetary policy amidst concerns of inflation and rising geopolitical tensions in the Middle East, which could potentially drive up commodity prices.
Although the U.S. Federal Reserve and some central banks in developed countries have opted to lower interest rates, it is anticipated that the RBI will maintain its current rate of 6.5%, a status quo it has maintained since February 2023. Analysts forecast possible rate changes only by December, pending an easing of inflationary pressures.
The MPC, led by Governor Shaktikanta Das, consists of both newly appointed external members and internal RBI members. The government's mandate to keep retail inflation around 4% faces challenges, yet the current fiscal year's GDP growth and CPI inflation forecasts remain steady. The RBI's decision, expected on Wednesday, will set the tone for India's economic approach amid global uncertainties.
(With inputs from agencies.)
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