The Reserve Bank of India (RBI) in its bi-monthly policy is likely to increase the repurchase rate by 25 basis points as inflation is expected to accelerate further due to higher crude prices and the weakness in rupee.
One basis point is a hundredth of a percentage point.
Here’s what bankers have to say ahead of the policy:
Repo Rate Action
About 60 percent of the bankers are of the opinion that the central bank will raise interest rate by 25 basis points on Friday at its fourth bi-monthly monetary policy meeting.
The remaining 40 percent, however, expect the RBI to keep the rates unchanged at 6.50 percent.
RBI raised the repo rate by 25 basis points, for the second consecutive time, to 6.50 percent in its August bi-monthly monetary policy. The reverse repo rate was also raised by 25 basis points, to 6.25 percent.
For the current fiscal year, about 70 percent of bankers expect the RBI to raise rate by 50 basis points while 20 percent expect a hike of 25 basis points. Only 10 percent of the bankers see rates unchanged.
Change in SLR
On the statutory liquidity ratio (SLR) front, all the bankers expect the central bank to maintain status quo. In the August bi-monthly monetary policy, SLR was retained at 19.5 percent.
SLR is the amount of money that is invested in certain specified securities predominantly in central government and state government securities.
GDP Forecast For FY19
About 70 percent of the bankers expect the GDP forecast to be maintained at 7.4 percent while 20 percent expect it to be lowered from the current figure. The remaining 10 percent expect the GDP forecast to be raised.
CPI Estimate For H2FY19
The Consumer Price Index (CPI) inflation estimates for the second half of the current fiscal year (H2FY19) stood at 4.8 percent. Nearly 40 percent of the bankers expect CPI estimates left unchanged, 30 percent see the RBI lowering them while remaining expect a hike in CPI estimate targets.
Neutral Or Hawkish?
A staggering 80 percent of the bankers are of the opinion that the RBI will be stay neutral while 20 percent see RBI to turn hawkish in the fourth bi-monthly monetary policy.
Around 70 percent of bankers see the central bank announcing more measures to ease liquidity amidst the current market scenario, while 30 percent negate the same.
RBI Policy Tone
A meager 20 percent of bankers anticipate the policy tone to be more hawkish while 80 percent of the bankers expect it to be the same as the last policy.
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First Published: IST