RBI EXPECTED TO MAINTAIN STATUS QUO

There is a consensus in the marketthatthe six-member monetarypolicycommittee won’tchange the policyrepo rate in their two-daymeet that concludes on Wednesday. Notonlyrising inflation, buthardening bond yields, and tightening liquidity also reduce the scope for the central bankto go lenienton rates for now. As such, the policyrepo rate is expected to stayat6 per cent, said a 10-member BSpoll of economists and bond dealers. While the policystance would likelyremain at‘neutral’, manyeconomists sayit could be the end ofrates easing cycle. The Reserve Bankof India (RBI) possiblycannotlower its

INDIA’s REAL GDP

Some green shoots of recoveryvisible in growth (YoYin %) rates at a time when global central banks are tightening their monetarystance. The interest rate spread has to be maintained for foreign investors to puttheir moneyin Indian stocks and bonds. The central argumentagainst the rate cutcontinues to be rising inflation. The retail inflation in October was at3.58 per cent, and according to many economists polled, the reading could be around 4.5 per cent for the rest of this financial year. While Moody’s did upgrade India, other rating agencies are yet to change their stance and therefore the RBI would unlikelyconsider the better rating byone agencyto justifya rate cut, economists said.

RETAIL INFLATION

Consumer Price Index-based inflation as forecastbyRBI, is on the rise (YoYin %)

IIP*

Industrial production slowed down unexpectedly *Indexof Industrial Production (YoYin %)