The Reserve Bank of India has increased the repo rate by 2.25 per cent since May last year due to disruptions in global supply chains following the Russia-Ukraine war.
New Delhi: S&P Global Ratings believes that with India's core inflation continuing to decline on a sequential basis, the need for further increases in the policy rate, which has reached a high of 6.25 per cent, remains limited.
The Reserve Bank of India has increased the repo rate by 2.25 per cent since May last year due to disruptions in global supply chains following the Russia-Ukraine war. The repo rate is currently 6.25 percent. The Monetary Policy Committee (MPC) of the Reserve Bank will announce its decision on policy rates on Wednesday.
The S&P report said, “India's core inflation is coming down from the second half of 2022 after being at a high level for a long time. At the same time, the policy rates are already at a high level of 6.25 percent.
The Reserve Bank has got the responsibility of keeping the retail inflation at the level of six percent (two percent up or down). Retail inflation remained above the Reserve Bank's satisfactory level for 11 consecutive months due to external factors such as the Russia-Ukraine war. In November 2022, retail inflation came down to six percent. In December, it came down further to 5.72 per cent.