India: RBI seen on hold this week – UOB

Lee Sue Ann, Economist at UOB Group, suggests the Reserve Bank of India would keep the policy rate unchanged at its Wednesday’s event.

Key Quotes

“The decision to raise interest rates in an unscheduled policy move on 4 May was in view of higher inflationary pressures for the year ahead. Notably, inflation was 6.95% y/y in Mar 2022, and significantly above the central bank’s upper tolerance threshold of 6.0%.”

“We look for higher policy rates into the year ahead, expecting further 25bps rate hikes, each in 3Q22 and 4Q22, to bring the repo rate to 4.90% by year-end.”