RBI's AUGUST 2023 POLICY EXPECTATION - UNCHANGED RATES AND STANCE

Monday, August 07 2023

There are concerns over higher consumer price index (CPI) inflation, driven by an increase in prices of vegetables and pulses. But despite the US Federal Reserve and the European Central Bank hiking benchmark rates, the RBI may continue with its policy repo rate unchanged for the third consecutive time at 6.5 % and the policy stance of ‘withdrawal of accommodation’ amidst surplus liquidity in the banking system and the considerable uncertainty surrounding the near-term inflation outlook. The movement of the domestic inflation and the global cues that are suggesting a greater probability of a peak out of the US Fed’s monetary tightening cycle would have a bearing on the form and substance of the forthcoming Policy pronouncements.

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