Indian Monetary Policy Tightened As Well
September 30, 2022
Excessive inflation also concerns officials at the Reserve Bank of India, who raised the repo rate by an expected half percentage point to 5.90% at this weeks policy review. Three previous hikes in May, June and August had totaled 140 basis points, more than reversing 115 basis points of ease enacted in the first half of 2020. One dissenting vote today had favored a rate increase of 35 basis points. Officials not only are concerned that current CPI inflation of 7.0% exceeds target but also felt a need to lend additional support to the rupee, which at 81.5 per dollar is close to its recent all-time low of 82.06 and almost 10% weaker than early in 2022. A released statement predicts “inflation is likely to be above the upper tolerance level of 6 per cent through the first three quarters of 2022-23, with core inflation remaining high” and notes “The outlook is fraught with considerable uncertainty, given the volatile geopolitical situation, global financial market volatility and supply disruptions.”
Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Reserve Bank of India
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