All 42 economists in a Bloomberg survey forecast the Reserve Bank of Indias six-member monetary policy committee will keep the repurchase rate unchanged at 6.50% on Thursday. Policymakers are keeping an eye on the likely occurrence of El Nino, which brings drier weather conditions and can affect crop yields.
This is expected to give some stability to the credit market, to boost capital expenditure and investments. The current rate hike cycle will help arrest inflation, and boost investment and consumption sentiment.
The MPC kept rates and stance unchanged, the latter with the expected dissent from Prof. Varma. While the rate inaction was expected by almost everyone, there was some debate on whether a more qualified stance may now be forthcoming. In the event, the characterisation on stance landed somewhat more hawkish than what may have been expected. We delve into details below.
The past week saw two notable developments for liquidity and money markets.One, RBI announced surplus transfer of Rs 87,416 crore to the Government of India. While within range of market expectations, this number was much higher than both last .