RBI rates unchanged |
The Reserve Bank of India left its policy rates unchanged in its second bi-monthly monetary policy review for this financial year. The benchmark repo rate, at which RBI lends to banks, is unchanged at 6.5% as the central bank as it took cognisance of rising inflation in recent months.Consumer price index inflation jumped to 5.4% in April from 4.8% the previous month. This “inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain. CRR remains at 4%. The Reserve Bank said while a good monsoon and the introduction of an electronic national agriculture market should moderate any sharp rises in food prices, there were upside risks to the inflation forecasts too.Firming international commodity prices, particularly of crude oil; the implementation of the 7th Central Pay Commission awards which will have to be factored into projections as soon as clarity on implementation emerges; the upturn in inflation expectations of households and of corporates; and the stickiness in inflation excluding food and fuel,” pose a risk to inflation remaining above RBI’s comfort level.
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