RBI To Keep Key Rates Steady In Its Last MPC Meet Of FY20

Now after Budget 2020 has been presented, all eyes are on RBI's MPC decision for which they have begun their three day meet on February 4, 2020. The apex bank considering the mounting concerns around economic growth and inflation, which for the December month breached the RBI's comfort zone to scale levels of over 7%, is likely to hold key policy rates steady at 5.15%.

Nonetheless, analysts expect the comments from the RBI on inflation and growth to be highly significant. The monetary policy statement for 2019-20 will be presented at 11:45 am on Thursday.

"With the CPI inflation expected to remain above 6% in January 2020, and record a gradual decline toward 4% over the next 8-9 months, we expect an extended pause from the MPC in H1 CY2020, along with a change in stance to neutral from accommodative in either the February 2020 or April 2020 policy reviews", Aditi Nayar, Principal Economist, ICRA, is quoting as telling a leading business daily.

"The budget doesn't propose a big increase in the borrowing which may give room to the RBI's monetary policy to cut rates. However, the RBI may wait a little longer to see the growth picking and inflation to come under its comfort zone before it cuts rates", Sameer Narang, Chief Economist, Bank of Baroda, told a leading daily.

For the ongoing financial year the GDP is estimated at 5% primarily due to a slump in consumption. In her latest budget, Nirmal Sitharaman projected the fiscal deficit to widen to 3.8% of GDP in comparison to 3.3% earlier.

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