Economist Warns RBI May Raise Interest Rates in October
Sunil Sinha predicts the Reserve Bank of India may increase interest rates to combat hidden inflation driven by rising crude oil and food prices.
Economist Sunil Sinha warns that the Reserve Bank of India may raise interest rates during its October policy meeting to address what he describes as hidden inflation. This pressure stems from rising global crude oil prices, with India's average import price reaching approximately USD 114 a barrel last month, though these costs have not yet been passed to domestic consumers via retail fuel prices.
Sinha argues that this underlying pressure, combined with rising retail and wholesale inflation, leaves the central bank with little room to maintain current rates. He further notes that food price risks are increasing due to a below-normal monsoon. He believes the central bank will factor these lurking inflationary pressures into its monetary policy decisions to stabilize the economy.
