The Reserve Bank of India (RBI) Governor Shaktikanta Das will make a statement at 2 pm on Wednesday, May 4, 2022, the central bank said in a tweet today. The statement comes at a time when inflation has soared and remained over the RBI’s upper tolerance band of 6%.
In the April monetary policy, the RBI had kept its key lending rate at a record low, keeping the repo rate unchanged at 4%. While the RBI’s rate-setting panel kept its accommodative stance, it also voted unanimously to focus on “withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.”
The Reserve Bank might change its stance to neutral from accommodative in the June policy, topping it up with a 25 basis points rate hike to curb inflation that’s hovering above its targeted range, predict economists.
India’s retail inflation accelerated to a 17-month high in March led by a sharper than expected spike in prices of food and manufactured goods, official data showed. It remained over the Reserve Bank of India’s upper tolerance band of 6% for the third month in a row. As per the monetary policy framework, the MPC has to maintain CPI inflation in the 2% to 6% range, with the median target of 4%.
Heightened geopolitical tensions due to the war in Ukraine have clouded the inflation outlook for central banks across the globe. Higher food and fuel prices have forced RBI to raise their inflation forecast to 5.7% from 4.5% for the current fiscal.
The yields on 10-year India bonds rose to 7.19%, as compared to 7.11% in the previous day, while the benchmark stock indices extended losses to over 1%.