RBI may keep policy rates constant
By Vaibhav Aggarwal
Dec 13, 2010
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The upcoming monetary policy review may see consistency in key policy rates in the upcoming review of monetary policy.

The review of monetary policy is scheduled on December 16.

The towering inflation rates had forced the apex bank to revise policy rates six times this fiscal.

"The Government is not earning anything on its idle surplus with the RBI. Interest rates in the money markets are currently at elevated levels. So, instead of going ahead with the Government borrowing when interest rates are high, it would be better for the Government to draw down the surplus and come into the market when interest rates come off a bit," said Mr Moses Harding, Executive Vice-President (Head - Global Markets Group), IndusInd Bank.

The expectations of consistency in policy rates comes in line with the fact that inflation figures are expected to be mellowing down.

"There is a definite trend for inflation to fall. As far as primary articles, fuel and power are concerned we have data of about two weeks ago. They do indicate that food inflation has come down. If this trend persists, then perhaps, no further action (by RBI) may be required. We think that by the end of December, inflation should come down to 6.5 per cent," said Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, at an IBA conclave in Mumbai.

"The RBI may not hike any rates. However, it may announce some measures to ease liquidity," said Mr GA Tadas, Managing Director and CEO, IDBI Gilts. "We don't expect the RBI to hike key rates in the forthcoming monetary policy as it once again reiterates the volatility and hence the sanctity of IIP growth; and also as WPI inflation, due next week, moderates (we expect it to moderate to 7.4 per cent year-on-year in November)," said Ms Deepali Bhargava, Economist, ING Vysya Bank.


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