NEW DELHI: Higher Minimum Support Prices (MSPs) for agricultural items, populist spending in the run-up to the 2019 general elections and strengthening of global crude oil prices were the key risks to the retail inflation, industry body ASSOCHAM said.
In its pre-credit policy review letter to the Reserve Bank of India (RBI), the Assocham said these key risks to the base case CPI inflation are there even when consumer price index (CPI) showed a decline in retail inflation to 4.44 per cent in February from 5.1per cent in the previous month.
ASSOCHAM Secretary General D S Rawat's letter to the RBI Governor Dr Urjit Patel said, this would leave "very little leeway for the RBI to cut rates in this monetary policy and hence we in ASSOCHAM expect the RBI to keep the key interest rates unchanged.
" It said the chamber appreciates Reserve Bank of India (RBI) for maintaining status quo in the previous Bi-Monthly Monetary Policy Statement and keeping the policy repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 6.0 per cent.
Consequently, the reverse repo rate under the LAF remained at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25 per cent.
The next meeting of the Monetary Policy Committee of the RBI is scheduled for April 4 and 5.