RBI likely to maintain status quo on Tuesday
08/08/2016 00:08
Reserve Bank Governor Raghuram Rajan is widely expected to hold the key interest rate in his last monetary policy review on Tuesday as retail inflation continues to be above the comfort zone. Rajan, whose 3-year term will come to an end on September 4, may prefer that RBI assesses the full impact of monsoon rains before taking a view on the interest rate. This is going to be the last bi-monthly monetary policy to be decided by the central bank Governor as the broad-based 6-member panel may take over the job before the next review on October 4. In conjunction with naming its 3 members on the Monetary Policy Committee, the government is also likely to name a successor to Rajan sometime this month. The government announced last week that it would like the RBI to focus on maintaining retail inflation rate of 4 per cent for the next five years, based on which the new interest rate setting panel would take its monetary policy decisions going forward. The move, which provides for a margin of plus or minus 2 per cent in this target thus fixing the upper tolerance level at 6 per cent till 2021, is being seen as government putting the seal on Rajan's inflation-first model of monetary policy.
