Key pointers to look out for in RBI monetary policy today

With speculations over RBI’s monetary policy to soften in regards to the interest rates that are soon to be declared by the apex bank, here are the pivotal pointers that might be on the list of the monetary policy committee.

The repo rate is expected to remain unchanged at 6.25 per cent, keeping the liquidity infusing tactics in tact, with the RBI most likely looking out for a more sustained low level inflation and weak growth rate before changing its neutral policy to accommodative.   

Inflation, according to the Consumer Price Index dropped to a record low of 2.99 per cent in the month of April, consequentially leading the MPC to soften RBI’s hawkish tone to a dovish one, as market experts recite. While if the RBI drops its inflation predictions, it might be-tell that the apex bank will tread on a relatively dovish path.   
       
The slumped trend in GDP growth to 6.1 per cent will further be a compelling factor bending the apex bank to let go of its hawkish policy measures.

Despite excess liquidity situation in the market, the experts do not expect a major policy measure to drain the liquidity, as raising cash reserve ratio (CRR) or government bond sales in open market is sought as extreme steps by the apex bank.

RBI is expected to set forth the Standing Deposit Facility, which will provide a greater clarity on the future projections of rates including the gap between reverse repo rate and repo rate. The apex bank had hiked the repo rate in April, followed by an effective impact of the same.