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RBI to remain accommodative
April 05, 2022
Despite spiraling inflation, the Reserve Bank is probably going to hold key rates and retain the accommodative stance at the forthcoming policy review later this week, a Wall Street business has said.
Bank of America Securities India in a pre-policy note on Monday said it expects the RBI-MPC to stay on hold on all rates on April 8 and hold its accommodative stance. In any case, the central bank will be pushed to revise upwards its CPI inflation forecast because of supply-side issues even as downside risks to growth rise.
The brokerage is likewise expecting the RBI to announce measures to ensure non-problematic execution of the government borrowing program, which has frontloaded the debt raising by deciding to raise as much as 59.1 percent or ₹8.45 lakh crore of the entire year gross getting of ₹14.3 lakh crore in the first half, which many feels will delay policy normalization.
The comfort provided by the expected improvement in inflation was the anchor for the super-dovish February policy.
Since the February meeting, Brent crude has gone up 21%, domestic petroleum, diesel pump prices are up 6.5 percent, homegrown LPG cylinder price is up 6%, and business LPG is up 12.5 percent, and edible oils are up around 12%.
Against this backdrop, the report said the RBI is expected to revise its FY23 average CPI inflation forecast from 4.5% and sight downside risks to their real GDP growth forecast of 7.8%.
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