RBI Governor Shaktikanta Das-led Monetary Policy Committee will today reveal its policy decision at the end of a scheduled review that began on Wednesday. Most economists expect the central bank to keep the key policy rates at existing levels, with inflation remaining above its target for more than a year and the country's gross domestic product still in a contractionary mode amid signs of rebound. Economists will eagerly look out for any improvement in the RBI's projections for economy and inflation in today's policy.
Here are 10 things to know:
All 53 analysts and economists who participated in a poll by news agency Reuters, ahead of last week's GDP data, said they don't expect any change in rates on Friday.
Expectations of a status quo on key rates comes at a time when official data released last month has confirmed the economy's first technical recession - which is two consecutive quarters of GDP contraction - since 1996, when the country began quarterly records.
Economists also pushed back the expected timing for the next rate cut by a quarter, after the RBI lowered its key interest rate by a total 115 bps this year to a record low.
RBI Governor Shaktikanta Das has said the economy is showing a stronger-than-expected pickup in recovery, but one needs to be watchful of the sustainability of demand after a series of religious festivals.
Experts will also look closely for any change in the RBI's commentary on economic activity, amid hopes of a sturdy V-shaped recovery after the record slump in the June quarter. Economists will closely watch for any changes in the RBI's economic projections.
In its previous scheduled review, the RBI's Monetary Policy Committee projected the economy to contract an overall 9.5 per cent in the current financial year, "with risks tilted to the downside", while holding rates at existing levels.
Since May, the repo rate - or the key interest rate at which the RBI lends money to commercial banks - has been kept steady at a 19-year low of 4 per cent. Currently, the reverse repo rate - the rate at which the RBI borrows from banks - is at 3.35 per cent.
Inflation has remained consistently above the upper end of RBI's mandated 2-6 per cent target range every month barring March this year while core inflation has also remained sticky.
Economists and market participants will also watch the RBI's commentary on liquidity. The central bank has taken a number of unconventional steps to bring down borrowing costs in the economy as above-target inflation prevents it from lowering the benchmark rate just yet.
The central bank's "accomodative" stance rules out any tightening of policy - or increase in key rates - to support the coronavirus pandemic-hit economy.
