RBI may maintain status quo in April monetary policy review as inflation cools off: Analysts

A meeting of the rate setting panel, the MPC, will begin on 4 April and the resolution will be announced the next day.

PTI March 27, 2018 07:38:59 IST
RBI may maintain status quo in April monetary policy review as inflation cools off: Analysts

Mumbai: The Reserve Bank of India (RBI) is likely to go for a status quo in policy rates at next week's monetary policy review on a cool-off in inflation, analysts said on Monday.

"We expect the MPC (monetary policy committee) to keep policy rates on hold and maintain its neutral stance," analysts at American brokerage Morgan Stanley said in a note. Its rival Bank of America Merill Lynch (BofAML) also seemed to be echoing the same view, but added that it expects a rate cut in the August review if the monsoons are favourable.

"We expect the RBI MPC to strike a balanced tone on April 5, with March quarter inflation set to average 4.6 percent, 0.50 percent below their 5.1 percent forecast," it said in a note on Monday. After surging to a concerning 5.2 percent in December, the headline inflation cooled-off to 4.4 percent for February and is expected to go down further.

RBI may maintain status quo in April monetary policy review as inflation cools off Analysts

RBI governor Urijit Patel. AFP pic

A meeting of the rate setting panel, the MPC, will begin on 4 April and the resolution will be announced the next day. Governor Urijit Patel will also be holding the customary post-policy interaction with journalists, which will be the first such conference after the nearly Rs 13,000-crore Punjab National Bank (PNB) scam came to light.

Analysts at Morgan Stanley said the six-member MPC will vote in the same pattern as last policy review, of 5:1 in favour of status quo, with Dr Michael Patra being the only one who would vote for a 0.25 percent hike in rates. BofAML analysts said inflation may be higher for the June quarter, but added that the RBI will see through the print because of the lower base in the year-ago period.

On the growth front, they said the RBI may indicate that the recovery is at an early stage and hence, there may be a case for continuing with the neutral stance.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

RBI maintains accommodative stance, leaves repo rate unchanged at 4%; hints at future relaxations
India

RBI maintains accommodative stance, leaves repo rate unchanged at 4%; hints at future relaxations

RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rate to historic low.

Banks' bad debt to rise sharply from 8.5% to 12.5% by March 2021 amid COVID-19: RBI report
India

Banks' bad debt to rise sharply from 8.5% to 12.5% by March 2021 amid COVID-19: RBI report

The RBI governor said preserving long-term stability of the financial system is the key to recovery of economic growth

Sashidhar Jagdishan set to be next CEO of HDFC Bank; Aditya Puri's successor joined back in 1996
Business

Sashidhar Jagdishan set to be next CEO of HDFC Bank; Aditya Puri's successor joined back in 1996

Jagdishan, a chartered accountant by profession, is a science graduate and has a Master's degree in Economics of Money, Banking and Finance. He has over 29 years of experience in the banking industry