RBI policy review will take place at 2:30 pm
The repo rate is at 6.25 per cent now, while the RBI has changed its stance to ‘neutral’ from ‘accommodative’, indicating pause in a rate-cutting cycle. Core inflation, which is consumer price index (CPI) minus food and fuel, is sticky at around five per cent, even as the headline CPI has fallen below four per cent, well within the target of RBI. However, economists say uncertain monsoon can flare up prices and, therefore, the central bank would likely wait before deciding the way for rates to go. Meanwhile, the focus would be to continue to nudge banks to cut lending rates.
Special deposit facility: Economists expect creation of non-collateralised liquidity parking instrument in this policy
Economists say: uncertain monsoon can flare up prices. So RBI would likely wait before deciding the way for rates to go
Now that US Federal Reserve has signalled that at least two more rate hikes will ensue in 2017, market participants will look for RBI’s take on the same.