Will maintain anti-inflationary stance, says RBI

The Reserve Bank of India (RBI) continues to focus on controlling inflation and inflationary expectations even as inflation has shown some signs of easing. RBI Deputy Governor KC Chakrabarty on Wednesday said the central bank sticks to the policy stance as stated in the quarterly review statement in July.

"Whatever the inflation guidance is given in the quarterly statement (July) that stands as of today," Chakrabarty said on the sidelines of an event here.

The wholesale price index (WPI)-based inflation was at 9.22 per cent in July, down from 9.44 per cent in the previous month. Inflation for May was revised upwards from 9.06 per cent to 9.56 per cent. However, core inflation, or price rise of non-food manufactured products, came at around 7.5 per cent in July, up from 7.3 per cent a month ago. Also, economists expect revised inflation in July will touch double digits.

"From a policy perspective, we expect the RBI to remain focused on bringing down inflation, ignoring signs of slowdown in growth, as both headline and core inflation are expected to remain elevated for the next few months. Therefore, we expect RBI to implement a final 25-basis-point repo rate hike in this cycle on September 16 and then stay on hold," said economists at Nomura Securities in a note.

In response to the RBI official's statement, the yields on the 10-year benchmark bond went up to close at 8.32 per cent after hovering around 8.29 per cent for most of the trade on Wednesday. Yields had closed at 8.29 per cent on Tuesday.

On new banking licences, Chakrabarty said the draft guidelines could be expected any time soon. RBI had submitted the draft guidelines on new banking licences to the finance ministry for approval, which is believed to have been cleared by the ministry.

Source: Business Standard