RBI POLICY OUTCOME AT 2.30 PM TODAY – 07 JUNE 2017

RBI policy outcome at 2.30 PM today

India’s central bank is expected to keep policy interest rates unchanged, but may lower inflation forecasts and dial back its hawkish rhetoric on price pressures, paving the way for a possible reduction later in the year.

All bar two of the 50 economists surveyed by Bloomberg News expect the Reserve Bank of India to keep the repurchase rate at 6.25 percent on Wednesday. Two economists expect a cut in the repo as well as the reverse repo rate as inflationary pressures cool and growth  drops to it slowest pace in two years. None expect any change in the cash reserve ratio.

If Governor Urjit Patel cuts rates, he will take the repo rate to its lowest in over six years and will continue a string of surprises that he and the monetary policy committee have sprung on investors since taking over in September last year.

In April, the monetary policy committee raised the reverse repo rate in a bid to tighten liquidity conditions after having shifted to a neutral stance in February, ending a two-year easing cycle. In December, when almost everyone was expecting the central bank to cut rates after an unprecedented cash ban hurt activity, Patel held rates. And in October, while chairing his first MPC meeting, Patel cut interest rates even though a majority were expecting him to stand pat.

“Growth and investment need to improve — these are indicators which are available,” Arun Jaitley, finance minister, said in a statement to CNBC TV earlier this week. “Any finance minister under these circumstances would like a rate cut, the private sector would like a rate cut. But then when you entrusted it with the MPC, I would rather wait for their decision.”

The monetary authority will announce its decision at 2:30 p.m. in Mumbai followed by a press conference 15 minutes later.

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