RBI scheduled policy rates at 7.25 percent

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MUMBAI : The Reserve Bank of India scheduled  its policy rate at 7.25 percent on Tuesday, pausing as widely hopped after a spike in food prices sent consumer inflation to an eight-month high.

But four of 51 analysts’ political leaders by Reuters had predicted the RBI would keep the repurchasing rate on hold.

Remarks:

PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

“The policy is on expected lines. They need softened their language on inflation. And if inflation undershoots from their trajectory, then some house for financial easing might open up later within the year.”

BACKGROUND

#The Reserve Bank of India (RBI) is unlikely to loosen policy before October, notably with retail inflation at an eight-month high when food costs spiked.

#India’s Finance Secretary pink-slipped reports that the govt. was attempting to curtail the central bank’s powers on financial policy.

#Indian producing activity expanded at its quickest pace in six months in July as new export orders accelerated, a business survey showed.

# India’s annual infrastructure output growth slowed to 3 % in June, on the rear of a pointy lag in electricity production, government information showed.

# India’s wholesale costs fell at a faster-than-expected annual rate of 2.4 % in June, their eighth straight decline, in the main on the rear of weak fuel costs, government information showed.

# Higher food costs pushed India’s retail inflation to an eight-month high in June, government information showed, moistening hopes of an rate cut by the financial organisation within the close to future.

# India’s annual industrial output growth slowed to 2.7 % in could, compared with a down revised 3.36 % in April, government information showed.

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