Reversing the declining trend of three months, retail inflation inched up to 4.58% in April. The Wholesale Price Index (WPI) based inflation too rose to 3.18% in April mainly on account of a spike in fuel prices. Most analysts had expected the RBI to hold rates this time with a shift to the withdrawal of accommodation. Reuters Poll of 56 economists predicted RBI to hold rates now and hike it in August.
In the last monetary policy meet not only did the RBI maintain status quo with neutral stance but lowered its inflation forecast too — however, the minutes of the meeting showed a hawkish stance. Key MPC members including governor Urjit Patel said that even as inflation had softened, expectations were firmed up, both for three-month and one-year ahead horizons, emancipating from the impact of higher MSP, higher crude oil price to fiscal slippage.
Deputy governor Viral Acharya clearly had said that he has “moved closer to switching from the neutral stance to begin the process of withdrawal of accommodation” as the central bank needed to separate “signal” (food and fuel prices) from “noise” (vegetable prices) in the data.
Ahead of the RBI MPC meeting, India’s benchmark 10-year sovereign bond yields rose to their highest in two weeks to 7.90% on Monday, while the rupee on Wednesday strengthened by 11 paise to 67.04 against the dollar at the interbank forex market.
To know more about us or our services, kindly visit www.aceinvestmentadvisory.com
Best Investment adviser in India & Genuine Stock advisory company