InvestorQ : Do you see the IIP number influencing the RBI stance on rates?
Aditi Sharma made post

Do you see the IIP number influencing the RBI stance on rates?

Mahima Roy answered.
2 months ago

Starting May 2022, when the RBI held the special meeting of the MPC, it has been largely obsessed with cutting down inflation. Towards this end, the RBI has hiked rates by 140 basis points. The positive outcome was that the retail inflation came down in response from 7.79% to 6.71% over last two months, indicating that the RBI hawkishness is working. The Fed has already given hints that they may go slow on rate hikes since US inflation had also moderated to 8.5%. after all, nobody wants the growth engine hampered.

RBI would be doubly wary since, in the Indian context, the growth engine is the big edge that India has. One assumption we can make now is that in the coming months, the RBI may slightly shift focus from inflation control to boosting growth once again. RBI has been aggressive and front-loaded rate hikes so that there is room for course correction in future. From the October 2022 policy, the IIP could once again start to matter to the RBI policy stance, although inflation control may still remain an overbearing theme.