INSUBCONTINENT EXCLUSIVE:
Many experts will, however, keep an eye on the RBI Governor's take on liquidity
Reserve Bank Governor Shaktikanta Das-led Monetary Policy Committee (MPC) will announce its policy decision
tomorrow, at the end of the bi-monthly review that started on Wednesday
The RBI Governor had kept the benchmark rates unchanged at its last policy meet in June, retaining the repo rate at 4 per cent and reverse
repo rate at 3.35 per cent
According to experts, the monetary policy makers will maintain interest rates at record lows at the upcoming policy meeting as the slow
easing of localized lockdowns, slow pace of vaccinations and the looming threat of another wave continue to hinder economic revival
All 61 economists polled by Reuters said they do not expect any change in the repo rate, which has been steady at 4 per cent since
But they expect the central bank to make two 25 basis point increases next fiscal year, taking the repo rate to 4.50 per cent by end-March
2023.Many experts will, however, keep an eye on the RBI Governor's take on liquidity
The RBI has maintained excess rupee liquidity in the banking system, with the daily surplus exceeding Rs 6 trillion, to help the economy
navigate the pandemic.Manufacturing and services sectors, which contribute more than two-thirds of India's gross domestic product, have been
going through a rough patch in the recent past.The seasonally adjusted India Services Business Activity Index posted 45.4 in July, a third
successive month in contraction territory amid subdued demand conditions
29.3 per cent in May from a year earlier, compared with almost 135 per cent in April
The sharp rise was on account of base effect as the country was under a strict lockdown during the same period last year
But more importantly, month-on-month industrial output fell 8.0 per cent from April.Traders expect yields to rise further, but the central
bank may intervene either directly or through some an open market operation to prevent a large uptick in yields and keep the government's
borrowing costs in check.The Monetary Policy Committee (MPC) has kept the key benchmark rates unchanged in the past five monetary policy
The banking regulator last cut its policy rates on May 22, 2020, in an off-policy cycle when the covid-19 pandemic first shook the
country.The Reserve Bank has slashed its key lending rates i.e
repo rate by 115 basis points since March 2020 to cushion the economy from the aftershock of coronavirus.Meanwhile, last week, the
International Monetary Fund (IMF) lowered India's growth projection from 12.5 per cent to 9.5 per cent for fiscal 2021-22 - down by three
percentage points, following the severe second wave of COVID-19 pandemic in the country.However, for the next fiscal 2022-23, IMF has
revised the economic growth estimate for India from 6.9 per cent to 8.5 per cent - higher by 1.6 percentage points.
