"Breaking: Rupee slips to 73.77".
With a general election due by May next year, Prime Minister Narendra Modi's Hindu nationalist party will want to campaign on strong economic growth and success in containing inflation.
India's inflation rate was 3.69 per cent in August and is expected to go above the RBI's projected 5 per cent by June 2019 on higher fuel prices, the weak rupee and strong consumer spending. "Till when will the 56-inch chest be on "silent mode", he tweeted and asked what happened to the promise of "achche din". The Monetary policy committee may raise rates by 25 basis points on Friday, the third time this year, amid a higher crude and the weakening rupee, according to a Bloomberg survey. In a clear indication that it is not yet done with rate increases, the central bank changed its stance to "calibrated tightening" from "neutral" that was in place since February 2017, Bloomberg reported.
Investors remained concerned over sustained foreign capital outflows and soaring crude oil prices that crossed the United States dollars 85 per barrel.
"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) made a decision to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent", RBI said in a statement on Friday. Indonesia has a large current account deficit stemming from its oil imports.
DBS economist Radhika Rao also predicted a rate hike. The risk to food inflation from spatially and temporally uneven rainfall is also mitigated, as confirmed by the first advance estimates that have placed production of major kharif crops for 2018-19 higher than last year's record.
The global benchmark Brent crude breached the U.S. 86 per barrel level, near its four-year high.