<p>Amid the concerns of fall in GDP growth and a widening of the fiscal deficit position, the Reserve Bank’s Monetary Policy Committee (MPC) is announcing the monetary policy on Wednesday.</p>.<p>With the consumer price index (CPI) inflation easing in November and a dip in Gross Domestic Product (GDP), most analysts are predicting the apex bank to hold on to the rates, after three-day long deliberations that will end on the afternoon December 5.</p>.<p>“In a global environment when the Federal Reserve is hiking the interest rates. MPC will maintain status quo as inflation remains manageable. They only look at inflation as a key variable for policy decisions,” said Tanvee Gupta Jain, India Economist at global advisory, UBS.</p>.<p>As of date, Policy Repo Rate is pegged at 6.5%, while the Reverse Repo Rate is pegged at 6.25%.</p>.<p>Repo rate is the rate at which the central bank of a country (Reserve Bank of India in the case of India) lends money to commercial banks in the event of any shortfall of funds. It is used by monetary authorities to control inflation.</p>.<p>However, it would be interesting to note whether the RBI revises its growth estimates for the FY 2018-19, after a recent dip in the GDP growth rate. Last week, the data revealed that India’s GDP growth slowed down to 7.1% in the September quarter, on back of the rising oil prices. On the other hand RBI, till now, forecasts, a GDP growth of 7.4% in the current financial year.</p>.<p>Despite the dip in the growth, RBI is unlikely to go rate cut, as in its last meeting RBI has kept its policy stance at ‘calibrated tightening’.</p>.<p>Since the last policy, in October, when the central bank surprised the market by keeping rates on hold, crude oil prices have slipped below $60/bbl and retail inflation has eased to a 13-month low of 3.31%, below the medium-term inflation target of 4% for the third straight month.</p>.<p>Amid the liquidity crunch arising out of the shadow-banking crisis, many in the market believe that RBI might go for the cut in the Cash Reserve Ratio (CRR). However, according to UBS, the central bank is unlikely to hike the CRR rates, as it has been pumping in a lot of liquidity through open market operations.</p>.<p>CRR is the share of a bank's total deposit to be maintained with the latter in the form of liquid cash.</p>
<p>Amid the concerns of fall in GDP growth and a widening of the fiscal deficit position, the Reserve Bank’s Monetary Policy Committee (MPC) is announcing the monetary policy on Wednesday.</p>.<p>With the consumer price index (CPI) inflation easing in November and a dip in Gross Domestic Product (GDP), most analysts are predicting the apex bank to hold on to the rates, after three-day long deliberations that will end on the afternoon December 5.</p>.<p>“In a global environment when the Federal Reserve is hiking the interest rates. MPC will maintain status quo as inflation remains manageable. They only look at inflation as a key variable for policy decisions,” said Tanvee Gupta Jain, India Economist at global advisory, UBS.</p>.<p>As of date, Policy Repo Rate is pegged at 6.5%, while the Reverse Repo Rate is pegged at 6.25%.</p>.<p>Repo rate is the rate at which the central bank of a country (Reserve Bank of India in the case of India) lends money to commercial banks in the event of any shortfall of funds. It is used by monetary authorities to control inflation.</p>.<p>However, it would be interesting to note whether the RBI revises its growth estimates for the FY 2018-19, after a recent dip in the GDP growth rate. Last week, the data revealed that India’s GDP growth slowed down to 7.1% in the September quarter, on back of the rising oil prices. On the other hand RBI, till now, forecasts, a GDP growth of 7.4% in the current financial year.</p>.<p>Despite the dip in the growth, RBI is unlikely to go rate cut, as in its last meeting RBI has kept its policy stance at ‘calibrated tightening’.</p>.<p>Since the last policy, in October, when the central bank surprised the market by keeping rates on hold, crude oil prices have slipped below $60/bbl and retail inflation has eased to a 13-month low of 3.31%, below the medium-term inflation target of 4% for the third straight month.</p>.<p>Amid the liquidity crunch arising out of the shadow-banking crisis, many in the market believe that RBI might go for the cut in the Cash Reserve Ratio (CRR). However, according to UBS, the central bank is unlikely to hike the CRR rates, as it has been pumping in a lot of liquidity through open market operations.</p>.<p>CRR is the share of a bank's total deposit to be maintained with the latter in the form of liquid cash.</p>
