Mumbai: Reserve Bank of India (RBI) is likely to maintain its repo, the rate given to the bank, was detained after meeting this week’s monetary policy committee.
However, some analysts feel that the central bank can climb the reverse repo level, the level in which he borrows, as part of his steps to normalize liquidity.
Such an attitude will not increase the interest rate of home loans and car loans.
However, the bank might see writing on the wall and began to raise some of their deposit rates as they saw shrinking liquidity.
The RBI monetary policy committee which will be met from February 7 to 9 will now hold a meeting from 8 to 10 February “with February 7, declared a national holiday by the Maharashtra Government as a sign of respect for Mangeshkar Lata, MPC Meeting has been rescheduled,” RBI said .
The RBI has adopted a contrarian approach to most central banks and has maintained accommodative policies despite global gains in commodity prices due to weak demand.
According to bankers, the output gap reflects a lack of demand in the economy despite easy money and import inflation.
“We expect the overall policy guidelines from the RBI to remain far more dovish than their global colleagues, because the output gap in India is likely to remain negative longer, while inflation must be broadly lower trends to 2022,” Rahul Bajoria said, Director of Implementing & Implementing Director Head of Indian economist Barclays.
The decision of the monetary policy committee, which met this week to vote at the level, will be announced by the Governor of RBI Shaktikanta Das on February 10.
According to Bajoria, the title inflation will remain close to the upper end of the RBI target range, set the stage to tighten gradual monetary policy in the coming months.
“We hope that the RBI begins to normalize the policy at the policy meeting next week by increasing the reverse repo increase,” he said.
Gotil Gupta from Edelweiss in a research report said that the RBI is expected to maintain the status of quo at the repo level and also maintain its accommodating attitude.
“However, to improve the money market level, there are quite a number of possible repo levels to see a 25bps increase,” said the report.