The fourth monetary policy committee (MPC) meeting of theReserve Bank of India (RBI) has begun today amid concerns over falling rupee and widening current account deficit (CAD), with top economists predicting a 25 basis points hike in repo rate for the third time in a row.
The central bank had hiked interest rates in June and August MPC meetings by 25 basis points each citing upward risks to inflation and volatility in crude oil prices. Between the last MPC meeting and now, the economic situation has become more intense due to the sharp decline in the rupee, besides high crude oil prices.
Top 5 issues the RBI should consider in 4th MPC meeting:
Tumbling Rupee: As the rupee continues to be Asia’s worst performing currency and has tumbled nearly 15% this year, the rate hike seems inevitable. “Some would say it (rate hike) could have come sooner … it probably would have been a bit more beneficial. But better now than never,” Radhika Rao, Economist, DBS told Reuters. Read More
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