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MNI RBI Preview - June 2021: Ready To Act, But Not On Rates

The RBI is expected to keep rates on hold at a record low for the sixth straight month, of 35 analysts surveyed all but one expects the Repo Rate on hold at 4.00%, one call for a 25bps cut. All expect the Reverse Repo rate on hold at 3.35%, while five analysts expect a 50bps cut in the Cash Reserve Ratio and 15 expect to remain on hold at 4.00%. Likely more interesting than benchmark rates will be any extension of liquidity measures and changes in policy guidance.

The bank has previously intimated it will retain its dovish bias for as long as needed to secure the recovery from the pandemic, a message that will be reiterated with the country still in the grips of the pandemic. While there are signs the surge in cases is easing state lockdowns remain in place and have seen the output gap widen and jobless rate rise, though inflation remains stubbornly high due to elevated commodity prices.

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RBI May 2021.pdf

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