India rate panel to dial up hawkishness even as it holds policy steady

MUMBAI, Aug 8 (Reuters) – India’s monetary policy committee (MPC) is expected to maintain key rates when it meets on Thursday, but will adopt a far more hawkish tone as the recent rise in food prices risks becoming entrenched, economists and market participants said.

A July 13-31 Reuters poll of 75 economists showed the central bank was expected to keep its repo rate unchanged at 6.50% at its Aug. 10 policy meeting.

Food price spikes in India, typical at the onset of the monsoon, drove up headline inflation in June, corroborating the MPC’s view that the fight against inflation is far from over, the Reserve Bank of India (RBI) said in its bulletin last month.