As the RBI's Monetary Policy Committee's mandate is to target inflation, there is a possibility that we may be seeing another rate hike -- the third in a row.
Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) will have to make a tough call on 5 October, over whether or not to hike rates. This seems to be a difficult time for the central bank, as on one hand, the fall in the rupee's value and rise in crude oil prices are feeding inflation, on the other, the IL&FS crisis and tightening liquidity in the money market are raising financial stability concerns.
Since the MPC's mandate is to target inflation, there is a possibility that we may be seeing another rate hike -- the third in a row. While a rate hike may not be the worst idea when it comes to controlling inflation, it would be interesting to see what other measures RBI would take to maintain financial stability going forward. The bank's guidance will be the key takeaway from the meeting.Watch Anchal Pathak in conversation with Moneycontrol Deputy Executive Editor Ravi Krishnan, who talks about the expectations from RBI's MPC meeting.