RBI will be content with the stability – Commerzbank

Economists at Commerzbank analyze the Reserve Bank of India (RBI) policy outlook and its implications for the USD/INR pair.

RBI to maintain a wait-and-see mode

RBI will remain vigilant and watchful on the inflation front. Lower commodity and oil prices have helped headline inflation to moderate to under 5% YoY in June. It is likely to remain around this level in Q3 but is expected to pick up in Q4, driven by the lower base and higher cost pressures. 

We expect RBI to maintain a wait-and-see mode and leave rates unchanged for the rest of the year. 

For USD/INR, RBI will be content with the stability. It continues to hold within the 81-83 range since the start of the year.