The Reserve Bank of India-led monetary policy committee (MPC) may revise gro­w­th forecast lower while keeping the repurchase rate stea­dy at fourth bi-monthly mo­n­etary policy meet on concern over rising retail inflation. MPC may vote to maint­a­in status quo, keeping the key lending rate or repo rate at 6 per cent at the 4th bi-m­o­nthly policy me­et, showed a poll of 25 experts showed.

MPC led by RBI governor Urjit Patel is scheduled to hold its sixth 2-day meeting on October 3-4, with the ce­ntral bank announcing the policy decision on October 4 at 2.30 pm.

“RBI may hold repo rate due to hardening of recent he­adline CPI prints and ma­i­ntain an extended pause this financial year given the uptrend in inflation towards 4.5 per cent by March 18,” said Upasna Bhardwaj, senior economist with Kotak Ma­hindra Bank. “We expect RBI to revise down its GVA (gross value added) print for FY18 and acknowledge further moderation in economic activity,” Bhardwaj said.

The India unit of Moo­dy’s investor services too expects RBI to maintain status quo, weighed by the recent uptick in the headline inflation numbers amid expectations of CPI inching higher.

“CPI inflation is expected to harden further in September, led by food and beverages, transport and communication, and housing, crossing 4 per cent by November,” said Aditi Nayar, Icra vice-president and principal economist. She sees little room for further monetary easing in 2017.

On the liquidity front, experts don’t see any new promulgation to normalise surplus liquidity in the banking system. Treasury officials believe RBI has been conducting OMO (open market operations) sales to suck out excess funds from the system and will continue to do so at a slower pace in the second-half of FY18. So far, RBI has sucked out around Rs 50,000 crore via OMO sales, and announced to conduct one more such intervention on September 28.

But IDFC Mutual Fund expects the likely announcement of the standing deposit facility window in the near-term, whose rate is expected to be closer to the reverse repo rate of 5.75 per cent.

“The currency in circulation by end March is likely to slow down, and the strength of BoP will moderate, hen­ce the pace of OMOs is likely to taper off by FY18 end,” said S Chaudhary of IDFC Asset Management.

Experts remain divided over the tone of the policy makers owing to the turnout of conflicting batch of mac­roeconomic data with hardening of headline inflation and moderation in economic growth. “RBI will maintain status quo with a neutral policy tone owing to uptick in inflation and mollifying growth numbers,” said L Iyer, chief investment officer, who expects one repo cut of 25bps in FY18.