What to Expect From RBI

The Reserve Bank of India (RBI) is expected to maintain silent on the key rates in its bi-monthly monetary policy announcement because of (i) Implementation of GST and (ii) Inflation.

• The proposed implementation of Goods and Service Tax (GST) from July 1, 2017, and it is likely that the RBI may wish to hang around and watch the implementation of GST and its effect on the economy before taking any action on the change in the key policy rates.
• The retail inflation number which is not all that troubling for the RBI as it has been at the level of 3% (i.e. 2.99%). Similarly, WPI inflation has also eased to a 4-month low of 3.85% in April 2017, according to the new series.

What RBI Did In Its Last Policy

RBI in its last policy meet (April 2017) had kept the Repo Rate unchanged and increased the Reverse Repo Rate. Here are the rates as per RBI’s first bi-monthly Monetary Policy Statement for 2017-18 announced on 6th April 2017.

FinBlab View –

RBI will be keen to watch on (1) The impact of GST on prices (if implemented from 1st July) and (2) How the monsoon will progress (though India Meteorological Department has predicted good monsoon this year) and other related issues to cut rates at the August 2017 meeting. But for now there in low expectation from RBI to cut rates.

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