The inflation shock is adding to uncertainty on whether the central bank would stick to its pledge of keeping policy accommodative to support growth after economy was battered by a deadly Covid wave
Foreign exchange reserves surged to $605 billion in the week to June 4 as the central bank mopped up dollars.
MPC likely to revise inflation forecast upward in August policy review
Data later today might show wholesale prices grew 13.3%, the highest rate in three decades, it's unlikely just yet to fully feed into consumer prices.
Oil prices and exchange rate, however, are key monitorables
The monetary policy stance is expected to remain accommodative for most of 2021, until a dramatic improvement in vaccine coverage quells uncertainty regarding the growth outlook
Nifty Bank is expected to touch 36,600 levels, as per the technical chart
Going forward, the inflation trajectory is likely to be shaped by uncertainties impinging on the upside and the downside. The rising trajectory of international commodity prices, especially of crude
RBI's higher surplus transfer has limits
In April, the six-member monetary policy committee had voted unanimously for a status quo on the key rates
The transfer was approved on Friday in the meeting of the regulator's Central board.
There are growing indications that India's latest wave of Covid-19 infections will add to risks among financial institutions by sapping near-term momentum from the economic recovery
Measures would help for 12-24 months but at the expense of delaying the resolution of asset-quality problems, says agency.
Central bank had last year announced a series of measures to support the economy suffering the impact of a nationwide lockdown
The commerce secretary said he expects robust growth in exports in the current fiscal year
Despite the surge in Covid-19 infections, the growth target also remained unchanged at 10.5 per cent for the fiscal, but inflation was tweaked upwards slightly
One challenge that the RBI might have to face in FY22 is the movement in exchange rate
RBI should not undermine the price and financial stability objectives
What really became the centerpiece of the policy outcome was the announcement of the secondary market G-sec acquisition programme which the bond market needed the most
Among other things, the policy provides much needed visibility on central bank's balance sheet support for the bond market