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MNI RBI Preview - August 2023: No Change, But Renewed Inflation Pressures In Focus

RBI
  • The strong sell-side consensus and our own bias is that the RBI will hold steady on rates at tomorrow's policy announcement.
  • The main focus is likely to rest on renewed inflation pressures, which to date have been driven by food-supply side issues. The RBI may well view such disruptions as temporary and better left to the government to deal with.
  • Still, with a strong domestic economic backdrop, the central bank is likely to be wary of renewed/broader based price pressures, particularly with inflation rates coming off elevated levels. This should be enough, at the very least, to keep the central bank maintaining its 'withdrawal of accommodation stance'.
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