For Quick Alerts
For Daily Alerts

RBI Expected To Maintain Status Quo: DBS

By Super

The Reserve Bank of India (RBI) is expected to keep the interest rate unchanged in its sixth bi-monthly policy review meet tomorrow, Singapore’s leading bank DBS said today.

RBI Expected To Maintain Status Quo: DBS

"As markets stabilise, we expect the Reserve Bank to keep the rates on hold on February 2. After a total of 125 bps rate cuts in 2015, the benchmark Repo rate is likely to be held at 6.75 per cent and reverse repo rate at 5.75 per cent," it said in a report on the Indian economy. "Reserve ratios will be left unchanged, we reckon. We see room for a 25 bps cut in March or

April if the 2016-17 Budget satisfies the central bank on the government’s fiscal consolidation efforts. (A March cut would be an inter-meeting decision)," it said.

Inflation is still within January 2016 targets, but faces upward risks as CPI inflation has been inching up since the third quarter of 2015. From a low of 3.9 per cent year-on-year in the September quarter, inflation rose to more than a year’s high at 5.6 per cent by December, noted the bank.

Core inflation, while still benign, has also tracked the uptrend, it added. Other price indicators, for instance WPI inflation and PMI sub-indices are also off recent lows, said the bank.

"The disinflationary impact of low crude prices was more than offset by a sharp jump in food price pressures and were not helped by adverse base effects," it pointed out. Service sector inflation remains sticky and indeed rose to 4 per cent year-on-year from 3.1 per cent in the September quarter.

Despite the recent increase, the inflation outlook appears manageable, said the bank with a growing presence in the Indian market.

The RBI’s inflation target of 6 per cent for January 2016 is unlikely to be breached, it said.


Read more about: rbi interest rate
Company Search
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more