RBI likely to hold rates Tuesday in its policy review

Last Updated: Tuesday, January 28, 2014 - 09:40

Zee Media Bureau

New Delhi: For the second time in a row, the Reserve Bank of India is expected to hold rates on Tuesday thanks to the falling inflation.

While the Wholesale Price Index inflation has fallen to a low of 6.6 percent in December, efforts are on to boost the sagging economy. Therefore, it is widely expected that RBI Governor Raghuram Rajan will keep the borrowing costs unchanged.

The central bank of India surprised the markets last month by holding the key interest rates at 7.75 percent despite inflation hitting a 14-month peak.

However, with inflation falling there are speculations that the RBI will hold rates.

Bank Governor Raghuram Rajan said at the time there was "reason to wait before determining the course of monetary policy" given forward-looking indicators suggesting inflation might cool.

Various industry polls and analysts are predicting a status quo from the Reserve Bank in the third quarter monetary policy review today, with a poll by foreign lender RBS saying over 80 percent of bankers, insurers and corporates expect no changes in any of the key rates.

Finance Minister P Chidambaram had last week strongly pitched for growth-supporting measures from the central bank. Speaking at the World Economic Forum in Davos, he said the RBI has an equal role to support growth.

SBI Chairperson Arundhati Bhattacharya declined to take a guess, saying, "The RBI will act in the best interests of everyone.

The bank is expected to announce its decision at 11:00 am (0530 GMT).

With Agency Inputs

First Published: Tuesday, January 28, 2014 - 08:53

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