India could be heading for another round of monetary tightening as retail inflation shows signs of accelerating, with November's consumer price index (CPI) inflation expected to approach 6.3 per cent. A report by Union Bank of India suggests that persistent price pressures may prompt the Reserve Bank of India (RBI) to increase interest rates at its upcoming December policy review.
\n\nThe latest assessment points to a challenging inflation outlook, particularly as food prices continue to climb and underlying inflationary pressures begin spreading across other sectors. With inflation nearing the central bank's upper tolerance threshold, policymakers may have limited room to delay further action.
\n\nUnion Bank of India expects the RBI to increase the benchmark repo rate by 25 basis points, taking it to 5.75 per cent during its December monetary policy meeting. The possibility of another increase to 6 per cent in subsequent reviews has also been highlighted.
\n\nHowever, the bank has not completely dismissed a more aggressive approach, suggesting that a single 50-basis-point increase could be considered if inflationary conditions warrant stronger intervention.
\n\n“Our Nov print is currently tracking close to 6.30 per cent with an upward bias, though food price trends need close watch,” the report said.
\n\nThe…
Original source: https://www.timesnownews.com/business-economy
