Hopes of pause dim as RBI maintains hawkish tone

The interest rate hike season is set to get longer, with the Reserve Bank of India (RBI) on Friday maintaining its strong anti-inflationary stance. While Friday’s 25 basis points increase in the repo rate that took the policy rate to 8.25 per cent was widely expected, what disappointed industry and markets was the central bank’s continued hawkish tone. The general expectation is the RBI is far from the pause button as it is concerned about the still elevated level of global commodity prices. The central bank pointed out there was still an element of suppressed inflation in the economy despite the recent adjustment in domestic fuel prices. 

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