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The Reserve Bank of India (RBI) is expected to keep the monetary stance unchanged at Friday’s meeting, suggested UOB Group’s Economist Barnabas Gan.

Key Quotes

“Given the Union Budget for FY2021/22, we believe that India’s policy-makers will rely on the fiscal approach to lift its economy out from the unprecedented slowdown. In terms of monetary policy, the RBI kept its policy repo rate unchanged at 4.00% in December 2020, following a 40bps cut in an unscheduled meeting on 22 May 2020. RBI has also kept its reverse repo rate and cash reserve ratio rate unchanged at 3.35% and 3.00%, respectively. Given the recovering economic fundamentals and strong fiscal response seen in the Union Budget FY2021/22, we now expect RBI to keep its policy rate unchanged in its upcoming RBI meeting on 5 Feb 2021.”