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.

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India Monetary Policy – August 2015 ( PDF 229 KB)