RBI may hold rates at monetary review

Aug 02 2014, 02:46 IST
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SummaryReserve Bank governor Raghuram Rajan is most likely to hold key rates at the review of the monetary policy on Tuesday, where factors like liquidity management measures are the ones to watch out for,brokerages said on Friday.

Reserve Bank governor Raghuram Rajan is most likely to hold key rates at the review of the monetary policy on Tuesday, where factors like liquidity management measures are the ones to watch out for,brokerages said on Friday.

“RBI to leave rates unchanged despite easing inflation... in no hurry to ease rates,” Singaporean brokerage DBS said in a note. It said the macro-economic backdrop is looking better on most counts since the last monetary policy review in June and specifically mentioned a stability in the industrial growth, saying it is only expected to consolidate over the next few quarters.

“We continue to expect the governor to be on hold on August 5. The RBI will be on long hold till it is clear that inflation is truly coming off,” analysts at Bank of America-Merill Lynch said in a note, adding that it expects the rate cut to happen only in December if the monsoons normalise to cool down inflation or early 2015 in case prices rise prolongs.

Inflation measured by consumer prices eased to 7.3% in June, down from 8.3% in the previous month. But, with poor rainfalls, some feel the improvement will not be sustainable.

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