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RBI Review

The Reserve Bank of India is set to announce its monetary policy for the 2014-2015 year on April first. While much of the speculation has predicted a continuation of the status quo inflation worries make any policy proposal difficult to predict. Retail inflation has been a concern of the RBI for much of the year. In January the RBI raised the repo rate .25% to 8% to curb borrowing and so far it has seen some success. As of last month retail inflation was at a 25-month low of 8.1%.

While inflation has slowed the rate increase in January was the third of the RBI since Raghuram Rajan took charge as Governor of the apex bank last September. And in spite of good signs worries of retail inflation continue because of projections of high food prices in the near future. Recent weather has damaged agriculture output and food inflation is expected for the coming months. Whether or not this plays a deciding role in upcoming monetary policy is unclear but if recent RBI actions are telling maintaining the status quo may not be on the agenda.

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