Economics

Time Is Ripe for Second India Rate Hike as Inflation Risks Mount

Sticky inflation, weak rupee make the case for RBI tightening
Bond investors buy short-term debt in anticipation of move

The BOJ and the RBI are among global central banks that hold meetings this week. Bloomberg’s Kathleen Hays reports.(Source: Bloomberg)

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By Kartik Goyal and Anirban Nag

July 29, 2018 at 12:00 AM UTC

Updated on

July 30, 2018 at 3:27 AM UTC

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India’s central bank is on course to raise interest rates for a second consecutive policy meeting as it takes more decisive steps to rein in inflation and stem capital outflows.

With inflation running well above the central bank’s medium-term target of 4 percent -- and the outlook set to worsen as oil prices stay elevated and the currency slides -- pressure is building on the Reserve Bank of India to act. Bond investors are already taking shelter in shorter-term debt amid concern this could be the start of a tightening cycle.