India’s central bank is expected to keep interest rates unchanged this week, diverging from many of its global peers as inflation remains modest despite higher global oil prices.
Global Context
Central banks in Europe, Australia, Indonesia, the Philippines, Singapore, South Korea, and South Africa have raised benchmark borrowing costs since the U.S.-Israeli war on Iran began five months ago.
The Reserve Bank of India’s Monetary Policy Committee will hold rates steady on Wednesday, according to 68 of the 72 economists in a Reuters poll.
Retail inflation accelerated to 4.38% in June, above the RBI’s 4% target for the first time in 17 months, but remained within the 2%-6% tolerance band the central bank uses to allow room to deal with short-term supply shocks.
Expert Insights
Samiran Chakraborty, Citi’s chief India economist, said, “Although core and underlying inflation have risen modestly, they remain within the RBI’s comfort zone. Consequently, a rate hike is unlikely in 2026 unless core inflation sustains above 4.5%.”
Tanay Dalal, economist at Axis Bank, expects the pressure visible on wholesale prices to pass through to CPI over a three-to-four-month horizon.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
