RBI likely to keep rates unchanged: Goldman Sachs
RBI may however revise its inflation forecast upward and maintain status quo on growth projection.
By ET Bureau |
MUMBAI: The Reserve Bank of India is likely to keep rates unchanged in its policy meeting on Tuesday, says Goldman Sachs. ���We expect the RBI to keep all rates unchanged ��� in line with consensus. The RBI has already cut rates aggressively. There is significant excess liquidity in the system, broad money (M3) growth has been relatively steady at about 20% yoy, financial conditions are extremely loose with our GS-FCI has loosening by 550 bps since November while credit spreads have fallen to pre-September levels and more importantly, inflation is showing a sequential uptick, especially in the various CPI indices. For all these reasons, we expect the RBI to stand pat,��� said Tushar Poddar, Vice President & Chief Economist, Goldman Sachs India.
RBI may however revise its inflation forecast upward and maintain status quo on growth projection. ���In its policy statement, we expect the RBI to move from a sole focus towards boosting demand, to giving more weight to inflation. We have argued earlier that inflationary pressures are on the horizon and our end-March 2010 target is at 6.5. This is at odds with the RBI���s own annual projection of 4%. We expect that the RBI may revise upwards its inflation forecast in the policy meeting, but may keep its growth projection unchanged at 6%,��� Poddar added.
RBI may however revise its inflation forecast upward and maintain status quo on growth projection. ���In its policy statement, we expect the RBI to move from a sole focus towards boosting demand, to giving more weight to inflation. We have argued earlier that inflationary pressures are on the horizon and our end-March 2010 target is at 6.5. This is at odds with the RBI���s own annual projection of 4%. We expect that the RBI may revise upwards its inflation forecast in the policy meeting, but may keep its growth projection unchanged at 6%,��� Poddar added.
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