A State Bank of India (SBI) report expects the RBI to maintain status quo during its monetary policy review in August, despite a significant pick-up in retail inflation in May. According to SBI’s research report Ecowrap, inflation may remain high in the coming months due to domestic and global factors.
The research report said on Wednesday, “We expect status quo in August. We believe that the RBI (Reserve Bank of India) will still try to maintain a pragmatic outlook on regulatory and developmental measures and monetary policy in its August policy review.”
The report further said that the damage has been done, but the RBI could still deliver a firm message in the face of inflationary pressures in its August policy statement.
Significantly, inflation based on the Consumer Price Index (CPI) reached a six-month high of 6.3 percent in May, from 4.3 percent in April. Inflation has crossed the RBI’s fixed range of 2-6 per cent.
The central bank had kept the repo rate at 4 per cent in the second bi-monthly monetary policy review announced on June 4. The next meeting of the Monetary Policy Committee (MPC) is to be held from August 4 to 6.
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