RBI tipped to maintain status quo on interest rates: Experts

Posted By: Religare
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RBI tipped to maintain status quo on interest rates: Experts
According to experts, the Reserve Bank of India (RBI) is unlikely to tinker with its key policy rates when it meets on Tuesday as it aims to bring down inflation to target levels in Asia's third biggest economy.

"RBI to leave rates unchanged despite easing inflation... in no hurry to ease rates," Singaporean brokerage DBS said, the PTI reported.

The central bank is tipped to maintain its key repo rate unchanged at 8 per cent.

Consumer price inflation, the most watched inflation gauge by the RBI, fell to 7.3 per cent in June 2014 from 8.3 per cent in the previous month.

The RBI is targeting consumer inflation rate at 6 per cent by January 2016.

However, with poor rainfalls threatening to cause a further spike in prices of fruits and vegetables, consumer inflation may rise upwards in the coming months, crimping any room for further policy easing by the RBI in the near-term.

Moreover, the economic outlook of the country seems to have brightened considerably as business sentiment improves amid major hopes from the new government, reducing need for an interest rate cut.

Manufacturing activity in India expanded at the fastest pace in 17 months in July 2014, a report by HSBC and Markit Economics said on Friday, signaling a revival in the economy.

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