RBI seen keeping rates unchanged

Monetary panel set to hold rates citing inflation growth revival

RBI seen keeping rates unchanged

The Reserve Bank of India kept repo rate unchanged in its fifth bimonthly meeting today.

This could mean that the interest rates might not be coming down in a hurry and EMI payers may not have anything to cheer about.

Patel, speaking at a news conference after the RBI kept its policy rate unchanged at a more than seven-year low of 6.00 percent, stressed that the recapitalisation would be accompanied with a reform package to ensure the problems do not recur.

The central bank also said that the "recent rise in worldwide crude oil prices may sustain, especially on account of the OPEC's decision to maintain production cuts through next year". In the meantime, the nation's inflation is expected to slightly accelerate in November and December on the base effect after rising to 3.58 percent year-on-year in October from 3.28 percent a month earlier. So, I think this is pretty much the bottom for lending rates.

Another source of RBI discomfort is that core inflation, which excludes food and energy prices, has remained stubbornly high at around 4.5 per cent. The central bank reiterated that it is maintaining a "neutral" stance in monetary policy.

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"We don't expect the tone to be outright hawkish as the RBI might need to trim down its growth projections for FY18, which at current levels is optimistic", said Rao, who expects a hold on Wednesday and in February.

In the wake of the low GDP numbers in the April-June quarter, there was a growing demand in the market that the RBI should cut rates so that investment activity in the economy would grow.

Price of pulses continue to show a downward bias, RBI said, and going forward retail prices may come down post Goods and Services (GST) Council decision to bring down taxes on several goods and services.

Let's understand what are repo and reverse repo rate.

In a Bloomberg survey, most of the economists said that the repurchase rate will stay at 6 per cent, whereas only a few economists predicted a rate cut of.25 per cent.

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