RBI likely to wait till August to raise repo rate

The Reserve Bank of India will delay its first interest rate rise by at least four months to August at the earliest, according to a Reuters poll of economists who said the central bank must now begin worrying about inflation.

Inflation has held above the RBI’s 6% upper threshold so far this year, raising doubts on its current strategy of keeping rates low to bolster growth even as some central banks are already raising borrowing costs in this cycle.

At its last policy meeting in February, the RBI did not deliver what was anticipated to be a small rise in its reverse repo rate to set the stage for lifting the repo rate, the main policy tool, from 4.0% where it has been for nearly two years.