India: RBI kept the steady hand in October – UOB

Economist at UOB Group Barnabas Gan reviews the latest interest rate decision by the RBI.

Key Takeaways

“The Reserve Bank of India (RBI) kept its policy repo rate and reverse repo rate unchanged at 4.00% and 3.35% respectively in its October’s monetary policy meeting, in line with market expectations. The monetary policy committee voted unanimously to keep the rates unchanged.”

“Similar to RBI’s August meeting, the MPC voted 5-1 majority to continue with an accommodative stance as long as necessary to revive and sustain growth on a durable basis, while keeping inflation within target.”

“RBI’s tone seen in the monetary policy statement continued to stay positive, similar to the previous August’s policy meeting.”

“Given the improving economic prognosis and ebbing COVID-19 infections in India, it is evident that RBI will likely floor its policy-rate at 4.0% for the rest of this year.”