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RBI:  The Status Quo Remains: Next Week’s CPI Key

INDIA CENTRAL BANK
  • Yesterday the Reserve Bank of India announced their decision, keeping rates on hold for the ninth consecutive meeting.
  • The RBI committee voted four to two in favour, with two members voting for a cut for the second consecutive meeting.
  • Market survey consensus was for no change citing (among other things) capacity to wait ahead of the Federal Reserve and strong headline GDP numbers.
  • RBI Governor Das indicated that ‘India is now significantly more resilient compared to earlier periods, but that it was crucial to wait for more data before drawing conclusions on the next step for monetary policy.’ Governor Das clearly stated, “the RBI will act as per incoming domestic, international data.”
  • Next week’s release of India’s CPI may provide an insight as to the next steps for the RBI.
  • Having risen in June, consensus surveys now are for a decline in the CPI in July.
  • A decline may provide the RBI with room for monetary policy changes post the September announcement by the Federal Reserve.

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