RBI MPC meet: Central bank likely to hold rates post Budget 2020 proposals

RBI MPC meet: Central bank likely to hold rates post Budget 2020 proposals

RBI had maintained a status quo in December, leaving the key repo rate-- the rate at which it lends to banks -- at 5.15 per cent amid rising concerns over inflation

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RBI revised the CPI inflation projection for the second half of 2019-20 to 5.1-4.7 per centRBI revised the CPI inflation projection for the second half of 2019-20 to 5.1-4.7 per cent
BusinessToday.In
  • Feb 5, 2020,
  • Updated Feb 5, 2020 5:35 PM IST

Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Committee (MPC) is expected to maintain status quo on policy rates in its last monetary policy for the current financial year, despite the economic slowdown. The MPC, which began its three-day meeting on February 4, will announce its decision on its key lending rates -- repo rate and the reverse repo -- on February 6.

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Amid spike in inflation, most economists expect the central bank to hold rates, adding that the panel might wait for an ease in food prices to see how inflation pans out in coming months. According to a Reuters poll of economists, the RBI is expected to keep the repo rate unchanged until October.

India's retail inflation rose to five-year high of 7.35 per cent in December from 5.54 per cent a month ago, limiting the scope for a rate cut to boost growth. Some economists remained divided on whether the central bank would continue to retain 'accommodative' stance, Reuters reported.

In a surprise move, the RBI had maintained a status quo in December, leaving the key repo rate-- the rate at which it lends to banks -- at 5.15 per cent amid rising concerns over inflation. The halt came after five consecutive cuts totalling to 135 basis points in 2019.

Reserve Bank of India (RBI) Governor Shaktikanta Das-led Monetary Policy Committee (MPC) is expected to maintain status quo on policy rates in its last monetary policy for the current financial year, despite the economic slowdown. The MPC, which began its three-day meeting on February 4, will announce its decision on its key lending rates -- repo rate and the reverse repo -- on February 6.

Advertisement

Amid spike in inflation, most economists expect the central bank to hold rates, adding that the panel might wait for an ease in food prices to see how inflation pans out in coming months. According to a Reuters poll of economists, the RBI is expected to keep the repo rate unchanged until October.

India's retail inflation rose to five-year high of 7.35 per cent in December from 5.54 per cent a month ago, limiting the scope for a rate cut to boost growth. Some economists remained divided on whether the central bank would continue to retain 'accommodative' stance, Reuters reported.

In a surprise move, the RBI had maintained a status quo in December, leaving the key repo rate-- the rate at which it lends to banks -- at 5.15 per cent amid rising concerns over inflation. The halt came after five consecutive cuts totalling to 135 basis points in 2019.

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