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

As the newly-constituted Monetary Policy Committee (MPC) started its first meeting Monday to fix the benchmark interest rate, experts said RBI may opt for status quo and wait for further easing of inflation.


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

Mumbai: As the newly-constituted Monetary Policy Committee (MPC) started its first meeting Monday to fix the benchmark interest rate, experts said RBI may opt for status quo and wait for further easing of inflation.

The 6-member panel headed by RBI Governor Urjit Patel began its two-day deliberations to consider various factors like inflation, credit offtake and the need to propel growth, foreign trade and global economic factors.

Moving away from the usual practice of announcement at 11 am, the fourth bi-monthly monetary policy review would be made public at 2:30 pm tomorrow after the MPC meeting.

Experts are of the opinion that given the price situation, panel is expected to keep rates unchanged to meet the targeted inflation of 4 percent with the margin of 2 percent on either side.

"I don't think the Reserve Bank is going to change rates as inflation readings - based on both WPI and CPI - have not softened much," Bank of Maharashtra Managing Director and Chief Executive R P Marathe told PTI.

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

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

Patel was the one who wrote the inflation targeting path for RBI when he was deputy to former Governor Rajan, and analysts say it is unlikely that he will jettison his guard on price rise, especially under the new inflation targeting framework.

"RBI is unlikely to cut rate this time," Union Bank of India Chairman and Managing Director Arun Tiwari said.

On his policy expectations from the new Governor, he said Patel may announce "some more measures related to resolution of non-performing assets".

From Zee News

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