India Monetary Policy Review – August 2015

The Reserve Bank of India (RBI) maintained the Repo rate 7.25%, as expected and the Government and the RBI are broadly in agreement regarding the future composition of the Monetary policy committee. The outlook for the remainder of the monsoon – and it impact on food prices, as well as the impact of the Fed’s anticipated rate rise are two critical determinants of future interest rate movements.

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Summary and Overview:

  • The RBI maintained the Repo rate 7.25%, as expected.
  • The Government and the RBI are broadly in agreement regarding the future composition of the Monetary policy committee.
  • Inflation, both headline and core, accelerated in June. Headline pressures are expected to abate during July and August due to favourable ‘base effects’.
  • The RBI will closely observe movements in core inflation as to whether the increase is temporary or not.
  • The Government and the RBI are working on adopt a medium term framework for Foreign Portfolio investment in Indian debt securities.
  • NAB Economics is forecasting the Repo rate to remain on hold at 7.25%, with an easing bias.
  • The outlook for the remainder of the monsoon – and it impact on food prices, as well as the impact of the Fed’s anticipated rate rise are two critical determinants of future interest rate movements.

For further analysis download the full report.

India Monetary Policy – August 2015 ( PDF 229 KB)