As India waits and hopes for rate cut, will Urjit Patel led RBI oblige? Must-know facts here
The RBI kept its repurchase (repo) and reverse repo rates on hold at 6 per cent and 5.75 per cent respectively in April but the MPC’s minutes from that meeting pointed to shifts in sentiment below the surface.
The Reserve Bank of India (RBI)'s monetary policy committee (MPC) will conclude its three-day policy meeting on Wednesday with the most analysts believing a status quo on interest rates front is in the offing. In a bankers poll by Zee Business, 100 per cent of respondents believe RBI will effect no changes in interest rates in June, although as many as 80 per cent of them expect a 25 basis points rate hike by the end of ongoing fiscal.
The RBI kept its repurchase (repo) and reverse repo rates on hold at 6 per cent and 5.75 per cent respectively in April but the MPC’s minutes from that meeting pointed to shifts in sentiment below the surface.
Meanwhile, Core CPI inflation surged to a four-year high of 6.1 per cent yoy in April, from 5.3 per cent yoy in March. Inflation is a growing concern for the central bank, say experts, as petrol and diesel prices are ruling near all-time high levels.
Here is what various brokerages expect from RBI:
Motilal Oswal Securities
Overall, neither domestic nor global developments warrant monetary tightening at this stage. In case the government announces a double-digit hike in MSPs (likely to be announced in the next two weeks), the RBI can hike policy rates in August 2018.
Nevertheless, if the RBI changes monetary policy stance this week and the MSP hike remains in single-digit, the RBI’s credibility will take a serious hit.
Capital Economics
The consensus is expecting the Reserve Bank of India (RBI) to keep rates on hold at the upcoming meeting that concludes on Wednesday June 6. But the hawkish tone of the previous meeting’s policy minutes, and the deterioration in the inflation picture since then, suggest to us that policy is likely to be tightened in June itself.
WATCH ZEE BUSINESS VIDEO HERE
UBS Securities
We expect the Monetary Policy Committee (MPC) to maintain the repo rate at 6 per cent. However, we assign a 40 per cent probability that the MPC will pre-emptively hike rates by 25 bps in the June policy meeting. We expect the tone of the policy statement to remain hawkish. The minutes of the April meeting suggest that two of the six MPC members have already decided to vote in favour of a 25 bps hike.
07:56 AM IST