ING economists Deepali Bhargava and Lynn Song expect the Reserve Bank of India to keep the repo rate at 5.25% this week. They note that while June headline inflation rose on higher fuel prices, core inflation remains below target. This gives policymakers room to maintain current settings while monitoring risks from elevated Oil prices and a possible severe El Niño impact on food.

RBI seen holding as risks monitored

"We expect the Reserve Bank of India to keep the repo rate unchanged at 5.25% on Wednesday."

"While headline inflation surprised to the upside in June, largely due to higher fuel prices, underlying price pressures remain contained."

"Core inflation continues to run below the RBI's target, providing policymakers with sufficient room to keep policy rates unchanged while monitoring evolving risks to the inflation outlook."

"Particularly from elevated oil prices and the potential impact of a severe El Niño event on food prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)