Survey: Reserve Bank of India Expected to Keep Interest Rates Unchanged This Week

Golden Ten Data, June 4 — According to a survey by The Wall Street Journal, the Reserve Bank of India is likely to keep its policy repo rate unchanged at 5.25% on Friday. Out of 11 economists surveyed, 9 hold this view, while the remaining 2 expect the central bank to raise the repo rate by 25 basis points to 5.50%. ANZ economist Dhiraj Nim stated that since depreciation pressure on the rupee persists and inflation may surpass the central bank's 6% tolerance cap and remain high later this year, an interest rate hike might be reasonable at this time. However, Citi Research analysts noted that the Reserve Bank of India has previously indicated its willingness to wait for second-round inflation effects to materialize before taking action, and using interest rates to defend the currency would be a last resort. Bank of America economists stated that although reasons for a rate hike are accumulating, they believe there is currently no room to stabilize the rupee through a substantial rate hike.