RBI may opt for status quo; First Monetary Policy Committee meeting begins

Business
Oct 04 2016 10:12 AM
Trainee_tripti

RBI may opt for status quo; First Monetary Policy Committee meeting begins

Mumbai: Reserve Bank of India (RBI) may opt for status quo and wait for further easing of inflation in the first meeting of the newly-constituted Monetary Policy Committee (MPC) meeting today to fix the benchmark interest rate, experts said.

The 6-member panel that’s headed by RBI Governor Urjit Patel began its two-day discussions to mull over various factors like inflation, foreign trade, credit offtake and global economic factors.

This time the fourth bi-monthly monetary policy review would be made public at 2:30 pm tomorrow after the MPC meeting, which usually used to take place around 11 am.

Given the price situation, panel is expected to keep rates unchanged to meet the targeted inflation of 4 % with the margin of 2% on either side, Experts said.

August retail inflation eased to a 5-month low of 5.05% but WPI inflation climbed to a two-year high of 3.74%. Before the dip that took place in August, both the retail as well as wholesale price indices was on a continuous upward spiral.

The government had notified 4%inflation target with a range of plus/minus 2 % for the next five years in August itself under the monetary policy framework agreement with the Reserve Bank.

Patel had written the inflation targeting path for RBI when he was deputy to former Governor Raghuram Rajan.

Credit rating agency Crisil also sees no rate cut on Tuesday.

If the 6-member panel separates itself on rate decision, the Governor can make use of his veto power to take a final call on the policy rates.

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