Your EMIs may not rise as RBI likely to leave rates unchanged

  • HT Correspondent, Hindustan Times, new delhi
  • Updated: Mar 31, 2014 00:15 IST

Supported by falling inflation rates, the Reserve Bank of India (RBI) is widely expected to keep its key lending rate, the repo rate, unchanged at 8% in its monetary policy review on Tuesday, temporarily warding off fears of an immediate hike in consumer and home loan installments.

India’s wholesale inflation rate eased to a nine-month low of 4.68% in February from 5.05% in the previous month on plunging vegetable prices, bringing respite for the UPA government ahead of national elections that begin next month.

Retail inflation — a more realistic index as it captures shop-end prices — eased to a two-year low of 8.10% in January from 8.79% in the previous month.

The RBI has raised lending rate three times in the last six months, to tame inflation by cooling demand. This has raised home loan EMIs. Experts, however, expect the rate-hiking cycle to be kept on hold for now.

“Given any lack of significant drops in the core WPI as also the core CPI, we do not expect any change in stance from the RBI at its monetary policy meeting on April 1 and also maintain a status-quo on rates,” said Indranil Pan, chief economist, Kotak Mahindra Bank.

A majority of respondents of an economic outlook survey of industry association Federation of Indian Chambers of Commerce and Industry (Ficci) also felt the central banks would keep rates unchanged in the policy announcement on Tuesday.

Analysts will be keeping a close eye for forward looking cues on the RBI’s outlook on the currency and the overall growth prospects.

A sharply rising rupee—it closed at an eight month high of 59.91 to the dollar on Friday—has also presented the Reserve Bank of India (RBI) with a dilemma. A strong rupee will aid its battle against inflation, but makes India’s exports pricier in the world market.

This has likely prompted the central bank to buy dollars to the tune of about $3 billion this week to shore up its forex reserves as well as stem the rupee’s rise to help exports, foreign exchange traders told HT.

From Around the Web
Sponsored by Revcontent

also read

Verizon to acquire Yahoo for $4.8 bn
Show comments

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Chrome and Ad BlockPlus users

1.Press the ‘ABP’ icon in your toolbar at top right of this page

2. Click on ‘Enabled on this site’; this should now change to ‘Disabled on this site’


chrome



For Chrome and Ad Block users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don’t run on pages on this domain’ and then click ‘exclude’ on the pop up


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Mozilla and AdBlock Plus (ABP) users

1.Press the ‘ABP’ icon in your toolbar

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Internet Explorer and AdBlock Plus users

1.Press the ‘AdBlock Plus’ icon in your status bar at the bottom of the screen

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Safari and AdBlock users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don't run pages on this domain’ and then click 'exclude'


chrome