India central bank holds rates as expected

India central bank holds rates as expected

India's central bank kept its key lending rate steady for a second straight policy meeting on Thursday, as widely expected, but signalled that monetary conditions will remain tight for some time as it looks to further curb inflationary pressures

The monetary policy committee (MPC), which has three members from the Reserve Bank of India and three external members, kept the repo rate steady at 6.50%.

All 64 economists in a Reuters poll taken between May 16 and 29 expected no change in rates.

COMMENTARY: KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU "The recent drop in y-o-y inflation is less about easing of prices and more about base effect. Domestic prices continue to remain elevated and there's no sign yet of actual prices coming off from their peak despite clear indication of inputs costs dropping."

"With rising corporate concentration translating into higher pricing power, they continue to focus on protecting their margins, preventing drop in prices. Thus, once the base effect wanes by October, y-o-y inflation may start picking up."

"In addition, with the El Nino effect lurking around the corner and the recent decision of Saudi to cut oil production, potentially pushing up crude prices, there is less certainty about the disinflationary trajectory."

"While we continue