RBI widely seen holding rates at policy meeting ending Friday

By Swati Bhat

MUMBAI: The Reserve Bank of India is widely expected to keep rates steady when its two-day monetary policy committee (MPC) meeting concludes on Friday.

The RBI said it will hold the MPC meeting from Oct. 7 to Oct. 9, having delayed it by a week in order to give the government time to appoint three new external members to the panel.

The government named its nominees late on Monday. Ashima Goyal is currently a member of Indian Prime Minister Narendra Modi's economic advisory council, while Shashanka Bhide is a senior advisor at the National Council for Applied Economic Research - a New Delhi-based think - and Jayanth Varma is currently a finance and accounting professor at the Indian Institute of Management, Ahmedabad.

They will join three RBI members on the panel.

"We do not believe the new appointments dramatically change the near-term monetary policy outlook," said Rahul Bajoria, economist with Barclays.

"Given our new inflation forecast trajectory, we believe that room to cut rates further will likely open up only in Q1 2021," he added.

All 66 respondents in a Reuters poll conducted ahead of the originally scheduled MPC meeting said they expect the repo rate to remain unchanged at 4.0 per cent and a large majority saw no cuts until the January-March quarter.

It has so far slashed rates by 115 basis points in response to the Covid-19 pandemic since late March.

The RBI however is expected for the first time since February provide guidance on how the economy is performing amid the coronavirus pandemic and give its outlook on inflation and growth.