RBI may keep interest rate unchanged

New Delhi: As inflation trends upwards, RBI may keep interest rate unchanged in the upcoming monetary policy review on Tuesday and possibly take a call post Budget 2016-17, which will give a direction about key macroeconomic parameters, including fiscal deficit, experts said.
However, some experts also feel that there is a case for front-loading of interest rate cut to give a push to economy.
“We can hope for rate cut. There is a case for deliberation and deliberations are related to data points and data points are going to very apparent after the Budget. Once the budget points on fiscal achievement those are hardwired then there is compelling case for RBI to cut rate,” Yes Bank Managing Director Rana Kapoor told PTI.
According to a Citi report, RBI is likely to keep key policy rates unchanged until the budget and go for a 0.25 percent easing in March or April this year.
“Considering the near-term risks on CPI inflation and the uncertainties around FY17 budget, we expect the RBI to leave rates unchanged until the budget on February 29,” Citigroup said in a research note.
WPI as well as retail inflation has been on rising trend.
In December WPI-based inflation stood at (-)0.73 percent, while retail inflation was at 5.61 percent.
RBI is scheduled to announce its sixth bimonthly monetary policy review on Tuesday.

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