INSUBCONTINENT EXCLUSIVE:
NEW DELHI: RBI's rate-setting panel is meeting today for its second bi-monthly policy review of 2018-19.
The decision is due on Wednesday
It will be the first time that the meeting is going on for three days because of "administrative exigencies".
In the normal course, the MPC
(monetary policy committee) meets every two months for two days before making public its stance.
What is there on the table Let's find out
Hawkish stance: While the apex bank may not go for a rate hike this time, air is rife with speculation that it will change its policy
stance to hawkish from neutral
According to an ET poll covering 25 market participants, the RBI would harden its stance to hawkish, a precursor to an eventual increase in
benchmark rates by the next meet in August
at DBS Bank.
The RBI has refrained from tweaking the repo rate since August 2017 citing inflationary concerns
However, Reuters says India could join the growing club of emerging market central banks that are tightening monetary policy as it may
deliver its first interest rate hike in nearly four and a half years.
Inflation: RBI's commentary on inflation will be keenly watched
A Prasanna, Chief Economist at ICICI Securities Primary Dealership in Mumbai, expects the RBI to revise its consumer inflation projection
upwards by 0.3-0.4 percentage points for March 2019 as the "risks to inflation are overwhelmingly ranged on the upside".
In its April meet,
the RBI revised projected CPI inflation for 2018-19 to 4.7-5.1 per cent in H1 2018-19 and 4.4 per cent in H2, including the HRA impact of
central government employees, with risks tilted to the upside.
Commentary on rising fuel prices: The MPC is expected to weigh in on
hardening domestic fuel prices
The domestic retail petrol and diesel prices are at an all-time high on account of spike in crude oil prices in the international market
Dearer petrol and diesel can further fuel inflationary expectations.
GDP growth: Indian economy grew at 7.7 per cent in January-March,
keeping the tag of world's fastest-growing economy
The full FY18 growth estimate was revised upwards to 6.7 per cent from 6.6 per cent in the second advance estimate released in February
In April meet, the bank had said several factors were expected to accelerate the pace of economic activity in 2018-19
How divided will the MPC be this timeIn its last policy review, RBI Deputy Governor and MPC member Viral Acharya had indicated that he
would vote for withdrawal of monetary accommodation in the June policy
Another member Michael Patra had voted for a hike in repo rate, but was overruled by a majority that opted for status quo
Hence, it would be worth watching how divided or united the MPC members are this time around.
