It is not clear what the RBI Governor will address in his speech.
The equity markets tumbled on the news of the RBI governor’s surprise address. Bond yields hardened to 7.22 per cent as traders feared an out of policy rate hike.
The strengthening of the dollar index has also caused worry as the a weak domestic currency could risk higher imported inflation at a time when supply shortages are already putting pressure on the economy.
The RBI in its April policy review had revised the inflation outlook upwards to 5.7 per cent for FY23 and pared the economic growth to 7.2 per cent.
The RBI also shifted its attention from growth to inflation in the last policy review. The Indonesian ban on export of palm oil along with volatile global crude oil markets pose upside risks to India’s inflation trajectory.