New Delhi [India], July 29 (ANI): According to global information service provider S&P Global Market Intelligence, the Reserve Bank of India (RBI) is expected to raise the repo rate by 35 basis points in its upcoming monetary policy meeting, in line with the global trend of tightening monetary policy to control inflation.
The next meeting of the monetary policy committee (MPC) is scheduled for August 3-5, 2022. So far, the RBI has raised the key interest rates by a total of 90 basis points in increments, bringing it to 4.90 per cent.
In June, India’s retail inflation has exceeded the RBI’s upper tolerance band of 6 per cent for the sixth consecutive month, reaching 7.01 per cent. Meanwhile, India’s wholesale price index (WPI) based inflation has remained in the double digits for 15 consecutive months.
The ongoing conflict between Russia and Ukraine has caused disruptions in the global supply chain, resulting in rising prices of essential commodities such as crude oil. This has contributed to the persistent inflation.
In the US, inflation reached 9.1 per cent in June, the highest it has been since the early 1980s. As a result, the US central bank has tightened its monetary policy.
“Following the 75-basis point hike by the Fed last week, US markets are eagerly awaiting non-farm payroll numbers, which will help determine the future direction of the Fed. The current expectation is for a slowdown in job growth, with the latest figure projected to be around 260,000 (down from 372,000),” explained S&P Global Market Intelligence.
In light of high inflation, the US Federal Open Market Committee raised its key policy interest rate by 75 basis points to 2.25-2.50 per cent earlier this week, anticipating that the increase in interest rates will be “appropriate.” Raising interest rates typically reduces demand in the economy, thereby slowing down the inflation rate.
Additionally, the US Commerce Department announced on Thursday that the country’s gross domestic product (GDP) had declined by 0.9 per cent in the second quarter of this year, following a 1.6 per cent decline in the first quarter. This technically puts the economy at risk of entering a recession. (ANI)