Elevated Policy Rate Limits Need For Further Rate Hikes By RBI: S&P

New Delhi:

S&P International Scores on Tuesday stated core inflation in India has been declining sequentially, and an elevated 6.25 per cent coverage fee limits the necessity for additional fee hikes.

The Reserve Financial institution has elevated the short-term lending fee by 225 foundation factors since Might final 12 months to comprise inflation, largely pushed by exterior elements, particularly international provide chain disruption, following the Russia-Ukraine struggle outbreak.

The coverage fee now stands at 6.25 per cent. The RBI’s rate-setting panel – Financial Coverage Committee (MPC) – will determine on the rate of interest on Wednesday.

“In India, core inflation has been elevated for longer; nonetheless, it eased sequentially within the second half of 2022. An already elevated 6.25 per cent coverage fee limits the necessity for additional will increase,” S&P stated in a report. The RBI has been tasked to make sure that retail inflation stays at 4 per cent with a margin of two per cent. Nonetheless, exterior elements have led retail inflation to stay above the higher tolerance restrict for 11 months in a row. In November 2022, the retail inflation got here under the 6 per cent stage and declined additional in December at 5.72 per cent.

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