India’s central bank hawkish, but rates stay on hold

February 7, 2018

NEW DELHI - The Reserve Bank of India (RBI) predictably left its policy repo rate unchanged at 6.00% today. The reverse repo rate and the cash reserve ratio were also unchanged. 

Five members voted for the decision to stay pat while one member voted for a 25bps hike. The policy stance continued to be characterised as neutral.

At the same time, the RBI raised its inflation forecast for FY2019 (fiscal year ending March 2019) and laid out an exhaustive list of upside risks to its forecast. Meanwhile, it appeared more comfortable on growth.

Commenting on the decision, ANZ Bank said the RBI’s assessment of upside risks to inflation and improving growth suggest that it is likely to maintain its policy repo rate at 6.00%.

“But the tone of forthcoming policy statements will remain hawkish,” AND said. (ATI).