The RBI is unlikely to bring down policy rates this month in view of high inflation, said a senior official at Standard Chartered Bank.
According to Samiran Chakraborty, Managing Director and Regional Head of Research for South Asia, Standard Chartered, policy rates are expected to remain high for a longish period.
“Inflation expectation is running very high. We have to be ready for policy rates to remain high for a longish period of time, I think,” Chakraborty said at the Banking Colloquium organised by the Confederation of Indian Industry (CII) here on Friday.
The RBI is scheduled to announce it monetary policy review on September 30.
According to him, it’ll be extremely difficult for companies to generate returns if inflation and wages continue to rise in double digits.
“The Government has to take steps to bring down food inflation,” he said.“The only role that the RBI is playing by keeping rates high is the second line of defence to ensure that there is no spillover (of food inflation),” he added. Market rates, Chakraborty said, may soften in the “near-term” if liquidity remains adequate due to capital inflows.
Foreign investors, according to him, will see India as an attractive investment destination in the context of its macroeconomic, political and exchange rate stability.
Chakraborty expects the rupee-dollar exchange rate to remain in the 60-62 range even as risks of an early rate hike in the US remain.