RBI could raise REPO Rate by 50 BPS

RBI could raise REPO Rate by 50 BPS

RBI could raise REPO rate by 50 BPs
  1. Europe’s unexpected move to raise the cost of funds for the first time in a decade underscores the stickiness of a global price spiral that prompted the second outsized increase in the US benchmark rates in as many months.
  2. All the takers viz bankers, traders, analysts and fund managers also expect RBI to change its stance to ‘neutral’ from accommodative and currently process of withdrawal of monetary accommodation is on.
  3. A poll conducted reveals that the mONetary Policy Committee (MPC) of RBI would choose to rather be in lockstep with the global central banks for the moment inorder to prevent a precipitate deline in the rupee, and thus seek to mitigate the risks of exaggerated fund outflows and improted inflation even as domestic prices lately are seen to be easing.
  4. The RBI policy in August is expected to re-emphasize the primacy of inflation targeting amid the continued volatility in the global forex markets.
  5. Another factor to be kept in mind is that the global crude oil prices, a key contributor to domestic inflation slipped below USD 100 a barrel about two weeks ago since expectations of additional supplies remained unfulfilled.

It is eagerly watched by people as to how RBI would assess the risk of inflation while keeping the door open for supporting growth.

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