By Saurav Mukherjee
Mumbai (Maharashtra) [India], July 30 (ANI): The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is widely expected to keep key policy rates unchanged at its upcoming meeting on Aug. 5 while closely monitoring global central bank actions and persistent inflation, according to leading economists who spoke exclusively to ANI on Thursday.
Assessing the impact of the U.S. Federal Reserve’s hawkish pause and the Bank of Japan’s policy stance, Ragini Sinha, Chief Economist at CareEdge, said domestic economic resilience outweighs concerns over foreign capital risks.
“Given the very fluid macroeconomic environment, we expect RBI to maintain the status quo in the upcoming meeting,” Sinha said, noting that interest rate cuts are off the table as domestic indicators remain healthy. She added that strong debt inflows and projected capital inflows of more than USD 70 billion will help support the rupee.
“RBI is going to focus on inflation control and not use the monetary policy tool for currency management… there is going to be abundant capital flows to take care of the currency,” she said.
Echoing expectations of a policy pause, Dipti Deshpande, Principal Economist at Crisil, said central banks worldwide are exercising extreme caution because of recurring conflicts in West Asia and ongoing supply-side pressures.
“Given a rising inflation situation in India, even if it is from the supply side, we don’t expect the RBI to cut any rates,” Deshpande said.
She highlighted growing price risks from higher input costs and the monsoon, adding, “In the forthcoming policy, they will remain vigilant, they will wait to assess the impact, and they will underline the risks to inflation.”
On exports, she warned that weaker global demand and rising protectionism pose near-term headwinds.
Analyzing market liquidity and interest rate trends, Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the Federal Reserve’s decision to pause is largely reflected in Indian equity markets.
“On an immediate basis, at least, they are not going to consider increasing interest rates… but in the month of September, definitely, they will start focusing on it very closely,” Chouhan said, cautioning that crude oil prices remaining above USD 85 per barrel continue to be a global concern.
On the domestic interest rate outlook, he added, “Broadly, we are of the view that we are not expecting any immediate interest rate hike in the near future… USD 105 is the level where we need to be very, very careful in this market.”
The economists collectively expect the central bank to rely on active liquidity management and targeted policy communication until inflationary pressures ease later in the fiscal year. (ANI)
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