RBI Likely To Hold Rates At Monetary Policy Meet This Week: Poll

Most respondents of two different polls of economists expect the Reserve Bank of India (RBI) to hold repo rate in the upcoming Monetary Policy Committee (MPC) meet on 29 September-1 October meeting.

Reuters poll of economists showed that there are expectations of the central bank holding rates until early 2021 in maintaining a delicate balance between curbing high inflation and lifting the economy from its worst contraction on record.

Retail inflation for the month of August was recorded at 6.69 percent, which is above the top end of RBI's medium-term target range of 2-6 percent for the fifth consecutive month. The Indian economy also reported its worst-ever contraction in GDP (gross domestic product) in history at 23.9 percent for the June ended quarter.

With the fastest rising coronavirus cases in any country in the world, India is poised to see a slow recovery.

All 66 respondents of a recent Reuters poll said that they export no change in rates in the upcoming MPC meet and the consensus showed that rates would remain on hold in December.

According to an Economic Times survey conducted among 20 market participants, all expect a status quo on both rates and policy stance to be set at 'accommodative', except Bank of America, which expects a rate cut of 15 basis points.

So far this year, RBI has cut reverse repo by 155 basis points (bps) to 3.35 percent and repo by 115 bps to 4 percent.