A rate increase is expected, accompanied by cautious language, said Jahangir Aziz of JP Morgan, as all eyes are on the Reserve Bank of India (RBI) which will announce the monetary policy decision today.
Aziz said that the financial stability still poses a looming risk.
“The same arguments were made in June that financial stability would play an important role in terms of deciding whether the RBI will hike or not. I think those same arguments remain and probably that strengthens now rather than weakened. So I am expecting them to hike today,” he added.
Talking about growth, Aziz said, “It will continue with the same language which is that growth is recovering from the GST and demonetisation effects.”