RBI Governor Shaktikanta Das-led Monetary Policy Committee (MPC) will announce its policy decision on October 8, after its three day bi-monthly review meeting. Reserve Bank of India is widely expected to leave its key interest rate unchanged for an eight straight meeting to support economic growth. Here’s what to look for in the policy fine print tomorrow.
Status Quo Policy?
The RBI is expected to maintain status quo on the repo rate to support growth, however some analysts see a slim possibility of a slight increase in the reverse repo rate – the level at which it absorbs cash from banks. However, it is expected that the RBI may continue to keep an accommodative stance
Signs of unwinding pandemic-led stimulus
Market watchers will be looking for signs of liquidity withdrawal, given that surplus cash in system, including possibly trimming a government bond-buying program. Core liquidity surplus is at a record high of Rs 12 lakh crore
Inflation Tweak
Economists expect the RBI to trim its inflation projection butt there are still risks to the upside. Rising oil and commodity prices, along with a shortage of coal supplies can risk higher inflation. This could make it difficult for the RBI, which has been so far only focussing on post-pandemic growth.
Policy normalisation likely in December
Economists expect policy normalisation may begin from December and a repo rate increase could be possible in the first or second quarter of the next financial year.
Published: October 7, 2021, 17:25 IST
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