The rate-setting panel is widely expected to keep the benchmark rate unchanged as it tackles the threat of a rising inflation due to the sudden spike in food prices
Te Reserve Bank’s rate-setting panel will begin its three-day meet on August 8. Most economists and analysts expect the Monetary Policy Committee (MPC) to hold the repo rate at 6.5 percent and continue to focus on withdrawal of accommodation as retail inflation is likely to breach the central bank’s upper threshold of 6 percent.
“Since the last RBI policy, inflationary pressures have increased. The sharp jump in vegetable prices have pushed expected inflation for the next two-three months above six percent. Cereal and pulse prices have also moved up. In this backdrop, the RBI should turn extra cautious at the upcoming MPC meeting,” says Pankaj Pathak, fund manager- fixed income, Quantum AMC.