The RBI's Monetary Policy Committee is liable to modify its policy posture to unbiased in its meeting this week on low increase footprint but would abstain from spiteful attention rates due to economic challenge and rising crude oil prices, experts said.
The bimonthly meeting of the MPC is planned from February 5 to 7. It would be the first MPC gathering under RBI Governor Shaktikanta Das, who took incriminate in December 2018 following sudden exit of Urjit Patel.
Bank of Baroda Chief Economist Sameer Narang experiential that the MPC may change its monetary manner to unbiased on February 7 from calibrated tightening'.
Retail price rises during the October-December quarter stood at 2.6 percent against RBI's projected trajectory of 3.8 percent.
"Given the important undershoot and now the story of a global slowdown, CPI price rises is predictable to stay below the RBI's target of 4 percent in 2018-19.
"This gives RBI a room to change its monetary policy stance. However, the elevated level of core mechanisms such as health, education, household, and personal goods suggest that room to cut rates is limited for now," Narang said.
A research report of DBS Economics said it would be a "tricky financial policy path for RBI" as the government predictable fiscal slippage in the Budget.
"The combination of fiscal challenge and rising oil prices makes the RBI's policy path a tricky one this year.
"Growth has largely bottomed out, but India has yet to benefit from the coordinated pick-up in global demand. In this light, we are expecting the financial policy group to turn hawkish, but not adequate for the balance to tip towards a rate hike this week," it said.
Sanjay Chamria, the Vice Chairman and Managing Director of Magma Fincorp, believe that Finance Minister Piyush Goyal in his Budget speech has "set the stage for a rate cut by the RBI".
In its December financial policy review, the RBI had kept interest rates unchanged but held out a assure to cut them if the upside risks to the inflation do not materialize.
Having raise charge twice this fiscal, the central bank retains its 'calibrated tightening' policy stance.
The government has mandated the RBI to contain retail (CPI) inflation at 4 percent (+,- 2 percent).
A continued decline in food prices pulled down retail inflation to an 18-month low of 2.19 percent in December 2018.
Meanwhile, Finance Minister Piyush Goyal is planned to address the customary post Budget meeting of the central board of Reserve Bank of India on February 9 and emphasize the key points of interim Budget.
