The Reserve Bank of India (RBI) is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a sharper-than-expected pullback in inflation in the last few months.

The Monetary Policy Committee (MPC) is likely to stick with its 'neutral' stance and flag uncertainty over the inflation outlook beyond June due to factors such as oil prices and the government's promise of increasing the minimum purchase price of foodgrains from farmers.

A Reuters poll showed all 61 respondents expected the RBI to keep the repo rate steady at 6 percent, its lowest level since November 2010. A majority of the economists polled expect the RBI to only start raising rates in early 2019.

"We expect the policy guidance and tone to be balanced and similar to that in February," said A. Prasanna, chief economist at ICICI Securities Primary Dealership, referring to the RBI's projection that inflation will moderate from October onward but with upside risks.

"Accordingly, the MPC will again vote for status quo with a preference to wait for more clarity on key risks."

Inflation unexpectedly fell after vegetable prices fell in early 2018 due to a surge in harvests. This is expected to keep price pressures soft for the next few months.

However, oil prices remain a risk, since India imports nearly 80 percent of its crude oil requirement.

It is noteworthy that February's consumer price index (CPI) inflation fell to a four-month low of 4.44 percent, and is also expected to stay behind the RBI's projection of 5.1-5.6 percent for April-September, the RBI is unlikely to lower its guard as it aims to lower inflation to 4 percent in the medium term.

The RBI will also be mindful of the pace of India's economic recovery as banks are likely to go slow on lending after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank.

That could slow down activity after India grew the fastest in five quarters at 7.2 percent.

"There can be some dent in the risk appetite among banks to give loans after the issues related to loan fraud were detected, which could add uncertainties to the pace of the near term recovery," said Siddhartha Sanyal, chief India economist at Barclays in Mumbai.

"We expect that policymakers will be careful of not stifling growth at the early stages of recovery," adding that he expected the RBI to be on hold for all of 2018.

RBI is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a pullback in inflation.

The Reserve Bank of India (RBI) is likely to keep interest rates on hold on Thursday for the fourth meeting in a row but maintain a cautious tone despite a sharper-than-expected pullback in inflation in the last few months. The Monetary Policy Committee (MPC) is likely to stick with its 'neutral' stance and flag uncertainty over the inflation outlook beyond June due to factors such as oil prices and the government's promise of increasing the minimum purchase price of foodgrains from farmers. A Reuters poll showed all 61 respondents expected the RBI to keep the repo rate steady at 6 percent, its lowest level since November 2010. A majority of the economists polled expect the RBI to only start raising rates in early 2019. "We expect the policy guidance and tone to be balanced and similar to that in February," said A. Prasanna, chief economist at ICICI Securities Primary Dealership, referring to the RBI's projection that inflation will moderate from October onward but with upside risks. "Accordingly, the MPC will again vote for status quo with a preference to wait for more clarity on key risks." Inflation unexpectedly fell after vegetable prices fell in early 2018 due to a surge in harvests. This is expected to keep price pressures soft for the next few months. However, oil prices remain a risk, since India imports nearly 80 percent of its crude oil requirement. It is noteworthy that February's consumer price index (CPI) inflation fell to a four-month low of 4.44 percent, and is also expected to stay behind the RBI's projection of 5.1-5.6 percent for April-September, the RBI is unlikely to lower its guard as it aims to lower inflation to 4 percent in the medium term. The RBI will also be mindful of the pace of India's economic recovery as banks are likely to go slow on lending after a loan-fraud scandal worth over $2 billion at the country's second largest state lender Punjab National Bank. That could slow down activity after India grew the fastest in five quarters at 7.2 percent. "There can be some dent in the risk appetite among banks to give loans after the issues related to loan fraud were detected, which could add uncertainties to the pace of the near term recovery," said Siddhartha Sanyal, chief India economist at Barclays in Mumbai. "We expect that policymakers will be careful of not stifling growth at the early stages of recovery," adding that he expected the RBI to be on hold for all of 2018.

RBI to keep rates on hold, sounds cautious despite easing inflation

The Reserve Bank of India (RBI) will announce its monetary policy review today. It will be announced in the afternoon at 2.30 pm IST against the existing practice of 11 am.

This will be Urjit Patel&#39;s maiden policy announcement as RBI Governor. Unlike his predecessor Raghuram Rajan who had the final say on interest rate cut decisions, Patel will have to go by the advice of a newly set up six-member monetary policy committee (MPC).

This is the first time that decision&nbsp;making on interest rates will shift to the six-member panel which has equal representation from the RBI and the government.

Since January last year, the RBI has cut the repo rate - the rate at which RBI lends to banks - five times.

India&#39;s retail inflation has touched a five-month low of 5.05 per cent in August, triggering hopes of a rate cut. The RBI and the government have set a retail inflation target of four percent for the next five years with an upper tolerance level of six percent and lower limit of two per cent.

Most analysts expect a status quo on rates. Mounting bad loans will remain another focus area of Patel&#39;s debut policy review.

Rajan has set a deadline of March 2017 for banks to clean up their balance sheets.

Patel has to ensure that there is no let-up on this cut-off date.

(ANI)

For the first time, decision making on interest rates will shift to a newly set up six-member monetary policy committee (MPC)

The Reserve Bank of India (RBI) will announce its monetary policy review today. It will be announced in the afternoon at 2.30 pm IST against the existing practice of 11 am. This will be Urjit Patel's maiden policy announcement as RBI Governor. Unlike his predecessor Raghuram Rajan who had the final say on interest rate cut decisions, Patel will have to go by the advice of a newly set up six-member monetary policy committee (MPC). This is the first time that decision making on interest rates will shift to the six-member panel which has equal representation from the RBI and the government. Since January last year, the RBI has cut the repo rate - the rate at which RBI lends to banks - five times. India's retail inflation has touched a five-month low of 5.05 per cent in August, triggering hopes of a rate cut. The RBI and the government have set a retail inflation target of four percent for the next five years with an upper tolerance level of six percent and lower limit of two per cent. Most analysts expect a status quo on rates. Mounting bad loans will remain another focus area of Patel's debut policy review. Rajan has set a deadline of March 2017 for banks to clean up their balance sheets. Patel has to ensure that there is no let-up on this cut-off date. (ANI)

Reserve Bank of India to roll out monetary policy review today

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RBI to keep rates on hold, sounds cautious despite easing inflation

Reserve Bank of India to roll out monetary policy review today