Rising inflation may obstruct RBI’s focus on growth

The surprise spike in retail inflation is expected to make it harder for the central bank to prioritize growth, putting its interest rate setting committee in a wait-and-watch mode at its next meeting on 4-6 August.

Economists believe that though the monetary policy committee (MPC) would not increase rates or change its stance at the meeting, it would raise an alert over rising inflation. An increase in repo rate, they believe, is not likely before 2022, although there could be a reverse repo hike in the December quarter. Reserve Bank of India (RBI) governor Shaktikanta Das has said several times that the central bank would remain accommodative as long as necessary to support growth.