RBI Likely To Take Neutral Stance in Monetary Policy Announcement

Reserve Bank of India (RBI) is likely to take ‘neutral’ stance in today’s monetary policy announcement. Media interaction with RBI top management will start at 1445 hours today.

However, some of the analysts in the market are expecting a rate cut by RBI which could be backed by a significant slip in the inflation in the market. RBI’s CPI inflation projections given in October 2016 for March 2017 stood at 5.3%. However, after demonetisation, CPI inflation continued to fall to 3.4% by December 2016. The huge difference of 110 basis points in RBI’s forecast and actual numbers is worrisome for the market.

The Central Statistics Office (CSO) on Wednesday, released the latest economic growth data which shows that gross domestic product (GDP) grew 6.1% on Y-o-Y basis during January to March period. The GDP growth rate for the year 2016-17 stood at 7.1%, lower from 8% of previous year.

 Also, the loan growth in the country has been declining for the current fiscal year. After demonetisation, the demand for loans is down to around 5%, at its multi-year low level.