(LiveMint)
The Reserve Bank of India (RBI) kept its policy rates on hold on Thursday and retained its “neutral” stance but lowered its inflation call, reducing the odds of a near-term rate hike and spurring a rally in stocks and bonds.
The RBI kept its policy repo rate unchanged at 6% for the fourth straight meeting as unanimously expected by 61 respondents in a Reuters poll. That level is the lowest since November 2010. It also kept the reverse repo rate unchanged at 5.75%. Five of six members on the monetary policy committee (MPC) voted for a hold, while one wanted a hike in the repo rate.
The MPC trimmed its April-September inflation projection to 4.7-5.1%, from a previous range of 5.1-5.6% that it had released in February. The “statement was more dovish than expected, particularly the cut in inflation forecasts,” said Teresa John, an economist with Nirmal Bang Equities in Mumbai. Inflation concerns have eased substantially in recent weeks following a crash in vegetable prices, which are expected to keep price pressures soft for the next few months. Oil prices remain a risk however, with India importing roughly 80% of its crude requirements.
