India: RBI to leave policy rates unchanged - TDS

Analysts at TDS expect the RBI to leave policy rates unchanged and maintain a neutral stance at its first meeting of the new fiscal year today in line with unanimous consensus expectations.

Key Quotes

“This means the benchmark repo rate should remain unchanged at 6.00%, the reverse repo at 5.75% and the CRR at 4.00%. We have also revised our forecast and expect the RBI to remain on hold throughout 2018, taking out a previously expected policy rate cut. An unchanged outcome is likely to have little impact on INR. Though we remain cautious on the INR over the near term due to higher external market volatility, we maintain a positive stance on the currency over the medium term. Similarly, Indian bonds are likely to register a limited reaction to an unchanged outcome. Further curve flattening is likely given an increase in issuance at the short end of the curve.”