All economists expect RBI to maintain neutral stand on repo rate Market update: Sensex and Nifty struggle ahead of RBI policy decision. Sensex down about 25 points while Nifty trading flat near 10,500. "The policy meet is another brick in the wall as all major factors are global currently," said Jayant Manglik, president, Religare Broking. "The volatility and uncertainty is going to continue for some time".
#Sensex edges higher, bonds flat ahead of RBI decision https://t.co/TdOayu215m pic.twitter.com/YJEm6iieuk
— Reuters India (@ReutersIndia) February 7, 2018
Rupee up by 8 paise to 64.16 in late morning deals ahead of RBI policy review
The rupee pared its early sharp gains but was still quoting higher by 8 paise to 64.16 against the US currency in late morning deals on sustained bouts of dollar
selling from banks and exporters amid higher local equities. The rupee opened sharply higher at 64.12 per dollar as against yesterday's closing level of 64.24 at the inter-bank foreign exchange here. Equity markets turn cautious ahead of RBI policy meet outcome
RBI expected to keep repo rate unchanged at 6%
Many economists expect RBI's tone to turn hawkish
Retail inflation hit 17-month high of 5.21% in December
RBI policy announcement comes days after Budget 2018
The
Reserve Bank of India (RBI)'s six-member monetary policy committee, headed by Governor Urjit Patel, is scheduled to announce on Wednesday its sixth and final bimonthly monetary policy report for the financial year. RBI is likely to keep its key rates on hold, but toughen its rhetoric as inflation has accelerated sharply, prompting an increasing number of analysts to expect a hike this year.
The outcome of the 6-member MPC meeting is being keenly awaited by stakeholders amid a huge sell-off in stock markets globally.
Inflation is expected to accelerate after the Union Budget last week showed the government's
fiscal deficit target for the fiscal year starting in April widening to help finance a sharp increase in spending in the rural areas and on health care.
Bond investors are already pricing in rate hikes, with benchmark 10-year bond yields rising over 80 basis points since July, the biggest move since the 2013 rupee crisis.
In its December review, the MPC had kept the benchmark
interest rate unchanged on concerns of a possible price rise but had left the door ajar for a rate cut in future.
After the government presented the pre-budget Economic Survey to Parliament, Chief Economic Adviser Arvind Subramanian too had indicated that the scope for RBI to lower
interest rate may be limited with growth picking up and inflation hardening.
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