RBI to maintain status quo on rates, domestic resilience key: Economists

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) is widely expected to maintain status quo on key policy rates in its upcoming meeting on August 5, while keeping a watchful eye on global central banks move and sticky inflation, according to leading economists speaking exclusively to ANI News on Thursday.Expert Outlook: Status Quo LikelyAssessing the impact of the US Federal Reserve's hawkish pause and Bank of Japan's policy stance, Ragini Sinha, Chief Economist at CareEdge, emphasized that domestic resilience outweighs foreign capital risks. "Given the very fluid macroeconomic environment, we expect RBI to maintain status quo in the upcoming meeting," Sinha stated, noting that rate cuts are off the table as domestic indicators remain healthy. She added that robust debt inflows and USD 70+ billion in projected capital flows will cushion 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."Inflation and Supply-Side RisksEchoing the pause expectation, Dipti Deshpande, Principal Economist at Crisil, pointed out that central banks globally are exercising extreme caution due to recurring West Asia conflicts and 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 emerging price risks from input cost pass-throughs and monsoons, 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 protectionism pose short-term headwinds.Market Impact and Global ConcernsAnalyzing market liquidity and interest rate dynamics, Shrikant Chouhan, Head of Equity Research at Kotak Securities, observed that the Fed's pause is largely priced into Indian equities. "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 explained, autioning that crude sustaining above USD 85 per barrel remains a global concern. On the domestic rate outlook, he concluded: "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 experts collectively expect the central bank to rely on active liquidity management and targeted policy communication until inflation risks subside later in the fiscal year. (ANI)(Except for the headline, this story has not been edited by Asianetnews Editorial staff and is published from a syndicated feed.)

RBI to maintain status quo on rates, domestic resilience key: Economists

Synopsis

Leading economists predict the RBI's Monetary Policy Committee will maintain the status quo on key policy rates in its August 5 meeting. They cite sticky inflation, domestic resilience, and the need to monitor global central bank policies as reasons.

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