Reserve Bank holds, but leaves door open for rate rise in India

December 19, 2013

~~NEW DELHI - The Reserve Bank of India has taken the market by surprise by keeping rates unchanged when a 25bps hike was expected. However, the central bank has clearly indicated that this is just a wait-and-watch and that it could lift rates, even before its next meeting in January, if necessary.

ANZ Bank says that while RBI sounds quite confident about the key culprit (vegetable prices) coming down, if that doesn’t happen or if there is no notable reduction in core inflation in December (“the latter is difficult in our view,” says ANZ), a 25bps increase can be expected. www.live.anz.com (ATI).