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No interest hike expected in RBI bimonthly monetary policy

NEW DELHI: The Reserve Bank of India (RBI) will present its bimonthly monetary policy on Tuesday, December 1. The central bank is expected to maintain status quo till the US Federal Reserve meeting takes place mid-December, according to most of the analysts.

In a poll by Reuters, RBI is anticipated to maintain its current policy rate of 6.75 percent next week to suppress inflation. The poll surveyed 45 economists and they all anticipated RBI to do the same in the upcoming policy review.

“We believe RBI will continue to maintain status quo on policy rates. There may be a tweaking of some regulations and some easing out but for this financial year, the chances of any further monetary easing are very limited,” said Dr Devendra Kumar Pant, the Chief Economist at India Ratings & Research, in an interview with a news channel.

With the US Federal Reserve is scheduled for a meet to decide on their interest rate, which is expected to be hiked. If this hike takes place it would have a direct influence over global markets, as a result of which investors would be looking for opportunities there.

On a similar note, the proposed hike (or status quo) would have an impact on the Indian stock market causing some instability due to domestic and international factors.

The European Central Bank is also expected to expand its stimulus programme to provide support to the ailing eurozone economies. Global investors are expected to keep a close eye on the forthcoming monetary policy on December 3 of the European Central Bank.

However, RBI had reduced interest rates to 0.5 percent in its last bimonthly monetary policy review on September 29, which was considerably higher than the predicted 25 basis points.

That had led to a standard of a reference point in repurchase (repo) rate, which has successively come down from 7.25 per cent to 6.75 per cent, the least it has gone in four and a half years.

Earlier this month, RBI Governor Raghuram Rajan mentioned that he believed the central bank was comfortable with the current rate of interest.

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