RBI likely to hold interest rates steady while announcing the monetary policy on January 28, 2014

January 26, 2014

Reserve Bank of India (RBI) will probably hold interest rates steady while announcing the monetary policy on January 28, 2014.

On January 28, 2014 the Reserve Bank of India (RBI) will release the third quarter review of monetary policy for the fiscal 2013-14 and the experts seem to be in consensus with regard to the possibility of RBI holding monetary policy rates.
Dr. Raghuram Rajan will present the fourth credit policy since he took over as the Governor of the RBI in September 2013. In his first two policies, he has raised the repo rate twice each by 25 basis points. But, in the third policy, he kept policy rates unchanged.
The current repo rate stands at 7.75 %.
The Wholesale Price Index (WPI) inflation stood to its five months low at 6.16 % in December 2013.
While the inflation was 7.52 % in November 2013, it stood at 7.31 % in the corresponding month last year (December 2012). Though, still inflation is above the comfort zone of RBI (around 5 %).
Similarly, due to the lower food prices, the consumer price index (CPI) inflation declined to 9.87 % in December when compared to a figure of 11.16 % in November 2013. The food inflation fell sharply to 13.7 % from 19.9 percent in November 2013. Although the retail inflation (measured by CPI) has eased a bit yet it is still hovering near the double digit mark.