RBI MONETARY POLICY: WILL THERE BE A RATE-CUT THIS TIME?
The Reserve Bank of India (RBI) will meet on 1st and 2nd of August 2017 to review monetary policy.
What to Expect From RBI MONETARY POLICY
As the Reserve Bank of India (RBI) is all set to meet for its bi-monthly Monetary Policy in the first week of August 2017, the market participants have been wondering if RBI chooses to cut the benchmark interest rate. There seem to be numerous good factors for the interest rate cut.
- India CPI (Consumer Price Index) inflation data came down to 1.5% for Jun’17.
- Food CPI came down to -2.12% in June.
- The IIP (Index of Industrial Production) data also came down – mainly due to decline in mining activities.
- Core CPI (ex-commodities) came in at 4% YoY.
- Indian Rupee also appreciated since the beginning of the year.
- Monsoon performance has been very good. Average or above average monsoon rainfall in the country may further bring down the food prices.
- GST rates were neutral to the inflation outcome.
- IMF (International Monetary Fund) expects India’s economy to grow at a higher level of 7.2%.
What RBI Did In Its Last Policy
RBI in its last policy meet (June 2017) had left the Repo rate unchanged at 6.25%, Reverse repo rate at 6%. Here are the rates as per RBI’s second bi-monthly Monetary Policy Statement for 2017-18 announced on 7th June 2017.
FinBlab View –
The above mention numbers and data clearly suggest that there may be a rate cut in the coming Bi-monthly Monetary Policy of RBI on 2nd of August. But still, the FinBlab view is that RBI Governer will remain silent in the up-coming policy and there is a low probability for a rate cut.
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