What happened: RBI kept the repo rate unchanged
June headline Consumer Price Index (CPI) inflation reached 4.38%, described as the highest in the current CPI series. CPI inflation remained above the RBI’s 4% target, yet the repo rate stayed unchanged.
Background: RBI managed macro risks linked to rupee weakness and crude-price shocks
Indicators and measures cited in the provided material included: Foreign exchange reserves near $700 billion.Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits around $40 billion, with expected growth before the scheme closes.A rupee level around ₹95 after a period when the rupee was among the weakest Asian currencies.A dollar-rupee swap to support FX liquidity.RBI absorbing hedging costs on fresh FCNR(B) deposits.
What changed now: concern that fuel-led inflation may spread beyond food and fuel
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