What to Expect From Urjit Patel’s First Monetary Policy Review

The new RBI governor Urjit Patel. (Photo: PTI)

Urjit Patel, the 24th governor of the Reserve Bank of India, will present his first monetary policy review on Tuesday. The policy decision, to be released at 2:30 pm, will also be the first to be taken by a Monetary Policy Committee (MPC).

The review comes at a time when retail inflation has fallen to 5.05 percent, close to the central bank’s target of 5 percent for March 2017. High frequency growth indicators, such as the Index of Industrial Production, however continue to indicate weakness. Some economists expect a 25 basis point cut in the benchmark repo rate to 6.25 percent while others are expecting a rate cut later in the year.

Markets remain divided on the likely actions ahead of the first RBI policy of the new Governor Urjit Patel, especially when the decision is expected to be MPC-based and the stance of the newly appointed external MPC members remains unknown, said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank.

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