New Delhi | Jagran Business Desk: The Reserve Bank of India is scheduled to announce its bi-monthly monetary policy on Wednesday, December 8. Amid fears surrounding the spread of new Omicron strain of COVID-19, the interest rates are expected to be kept at record lows. The lending rate or the repo rate is expected to remain unchanged at 4 per cent by the RBI Monetary Policy Committee (MPC). If the repo rate remains unchanged, this will be the ninth straight time that the Central Bank will keep lending rates the same.
“We were previously expecting the RBI to hike the reverse repo rate 15-20 bps in December, but given the uncertainty emerging from the new COVID-19 variant, we now expect status quo,” Morgan Stanley economists wrote in Reuters.
Economists say that speculations around hike in reverse repo rate may be premature in the immediate future.
"We believe the talks of a reverse repo rate hike on December 8 may be premature as the RBI has been able to narrow the corridor without the noise of rate hikes and ensuing market cacophony. Moreover, Section 45Z (3) of the amended RBI Act of 2016 clearly states that the monetary policy committee shall determine the policy rate required to achieve the inflation target," a report by State Bank of India’s house economists said.
Economists also point out that the RBI has done the balancing act by keeping repo rate unchanged, since the pandemic is not yet over.
"Against this background, delaying normalisation measures is prudent in the current situation which would also give time for economic recovery to strengthen further the stance needs to continue to be accommodative to support growth while the recovery remains uneven,” Soumya Kanti Ghosh, Group Chief Economic Advisor, State Bank of India, was quoted as saying by news agency PTI.
Posted By: Mukul Sharma