World Economy

RBI Likely to Maintain Status Quo

RBI Likely to Maintain Status QuoRBI Likely to Maintain Status Quo

With banks flush with funds post-demonetization and surging oil prices likely to fuel inflation, the Reserve Bank of India may refrain from lowering benchmark interest rate at its policy review meet this week, PTI reported. However, with services sector contracting for the third straight month in January, there are hopes that the central bank will be accommodative in its monetary policy. Banks are flush with low-cost deposits on account of demonetization of high-value currency notes of Rs 500 and 1,000, as a result of which their lending rates fell by up to 1% last month. Although banks and industry have been pitching for cut in benchmark repo rate (short-term lending rate), the six-member Monetary Policy Committee headed by RBI Governor Urjit Patel may adopt a cautious approach on February 8, especially in view of spike in crude oil prices and growing protectionist sentiment with Donald Trump taking charge as the US president.


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