look news india
Mumbai: Keeping in mind the rise in crude oil prices after Iran's missile attack on Israel, the Reserve Bank of India (RBI) is less likely to cut interest rates next week. Israel has threatened to retaliate against Iran's attack, indicating further increase in tension.
After being at a high level continuously for the last two and a half years after Corona, interest rates have started falling in most of the countries except Japan, but the tension in the Middle East has increased the concern for policy makers in various countries.
The US Federal Reserve had cut the interest rate by half a percent last month, indicating another half percent cut by the end of the current year. However, now the situation has taken a different turn, before the Federal Reserve, had already started cutting interest rates in the UK, Canada and the Eurozone.
The Monetary Policy Committee (MPC) meeting of the Reserve Bank is being held between 7 and 9 October. The Reserve Bank has maintained the interest rate at 6.50 percent from February 2023. A banker said high crude oil prices could upset the Reserve Bank's calculations when the country is expecting a good monsoon and crop irrigation this year.
Inflation in July and August has been below the RBI target of four percent. Retail inflation rate was 3.54 percent in July and 3.65 percent in August. Due to inflation being below the target this year and good monsoon, it was expected that the Reserve Bank would start cutting interest rates in the October meeting. If the war escalates, the possibility of a surge in crude oil prices cannot be ruled out. In such a situation, inflation may again go above four percent.