Expected On Hold

The RBI will announce monetary policy settings at 0430GMT/1000GMT, the main repurchase rate is expected to remain at 4.00%, but with dovish risks; of 35 analysts surveyed by Bloomberg, 5 are expecting a 25bps cut.

• At the start of February Finance Minister Sitharaman's delivered an annual budget that emphasised spending to revive growth. This likely comforted the RBI, which bore the brunt of easing efforts in the pandemic, enacting 115 basis points of interest-rate cuts and ensuring liquidity in the financial system.
• Market participants will be looking for a direction on liquidity policy and bond purchases. The RBI took some tentative steps to reduce liquidity support in the financial system, but the announcement saw bond yields shoot up, a move that was exacerbated by the bigger than expected budget.
• The bank are also expected to upgrade growth forecasts in the wake of the proposed budget, and positive economic developments including strong data, easing inflation and the vaccine roll-out. However the bank is also likely to reiterate its supportive stance and commitment to low borrowing costs moving forward.