RBI to review 5th monetary policy today

Tue 01 Dec 2015, 10:13:10

The Reserve Bank of India will announce its fifth bimonthly monetary policy review today. Analysts say RBI is unlikely to cut rates further ahead of the US Federal Reserve's policy review due mid-December and also due to concerns over inflation.

In its previous policy review on September 29, the central bank cut the repo rate, at which it lends to commercial banks, by 50 basis points to 6.75 per cent, raising the cumulative rate cuts for the calendar year to 125 basis points.

Inflation based on the consumer price index has gone up to 5 per cent in October, from 4.41 per cent in September, mainly on the back of rising food prices.

The RBI recently lowered its growth forecast for the country's current fiscal to 7.4 per cent, from the 7.6 per cent it had projected earlier.

The central bank is also mindful of the inflationary impact of a falling rupee, which has already hit a two-year low against the dollar recently.

The two key events the central bank will be considering are the upcoming Federal Reserve’s meeting and the impact of the 7th Pay Commission recommendations.

Federal Reserve meeting will be held on December 15-16 to take a call on interest rates.

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