RBI to maintain status quo in review today, say experts

As Reserve Bank of India Governor Raghurajam Rajan readies himself to present the monetary policy on Tuesday morning at the RBI headquarters in Mumbai, the verdict among the bankers and market participants seem to be clear.

The wait for a rate cut may get longer with the central bank likely to maintain status quo in its monetary policy review.

“RBI is unlikely to cut rates on Tuesday as food inflation is still high and it has not come under control yet. We expect the central bank to start cutting rates only from the next financial year,” Dena Bank chairman and managing director Ashwani Kumar told Deccan Herald.

“We see no upward bias in interest rates. The downward cycle for interest rates is likely to resume from the first quarter of next year,” SBI Chairman Arundhati Bhattacharya had said while announcing the first quarter results of the bank.

Markets are also expecting a status quo from the central bank in its policy on Tuesday before starting the rate cut cycle. According to a note by Axis Bank, the RBI is unlikely to cut rates on Tuesday. “We expect RBI to wait for some more decisive evidence on the overall inflation trajectory once the base effect has played through and for decisive fiscal consolidation moves,” the Axis Bank note says.