All eyes on RBI policy review meet; rates likely to remain unchanged

All eyes are on Reserve Bank of India (RBI)’s monetary policy committee (MPC) meeting today where the apex bank will decide key policy rates. 

Based on a Zee Business poll, RBI is likely to keep interest rates unchanged keeping in mind the upside risks of inflation.

According to a poll conducted by Zee Business, majority of the respondent said the apex bank will keep repo rate, the rate at which the central bank lends to banks, unchanged at 6%. However, 85% of the respondent said that RBI’s commentary will be hawkish.

About 60% respondents said that RBI’s inflation target, which is currently at 4.7% for Q4FY18, will not go up, while 40% think the target may increase. 

Rising oil prices and the lingering impact of a rise in house rent allowance, as part of the Seventh Pay Commission’s recommendations, are likely to keep future inflation at the elevated level. 

Chanda Kochhar, Managing Director and CEO of ICICI Bank, said that the apex bank will not change policy rates given the inflationary pressure and liquidity position. She said it may go up in the near term.

Keki M Mistry, vice chairman and CEO of HDFC, told Zee Business, “We are at the bottom of interest rate, I don’t see interest rate going up in next three to four months.”