RBI 's existing policy rates

RBI has the unenviable task of managing inflation and at the same time ensuring that credit flow to industry is not hampered due to its tight monetary policy in view of the slow down in manufacturing and GDP growth in..

The Reserve Bank of India (RBI) in  a short while from now will announce the third quarter review of its monetary policy 2013-14 and markets have been speculative in the past few days as the Central Bank is feared to raise key rates in view of the inflationary trends prevaling the economy.

Here are the existing policy rates:
Bank Rate: 8.75%, Repo Rate: 7.75%, Reverse Repo Rate 6.75% and Marginal Standing Facility 8.75.

RBI has the unenviable task of managing inflation and at the same time ensuring that credit flow to industry is not hampered due to its tight monetary policy in view of the slow down in manufacturing and GDP growth in general. Indian economy will be blessed with abundant food grains this year following good monsoons and higher acreage seen in rabi crop.

The interest rate hike cycle has certainly peaked while the Reserve Bank of India (RBI) may still be feeling constrained to go in for an easy monetary policy tomorrow, an ASSOCHAM (Associated Chamber of Commerce and Industry) assessment paper has noted.

It said while the business and industry want the central bank to go in for bold measures and announce major cuts in the policy rates, the expectations may not be met by the RBI, adds the ASSOCHAM paper.

“There is a pressure building again on the Indian Rupee as emerging markets’ currencies weaken against the USD. For us in India, the currency depreciation could mean more of imported inflation. This development along with further tapering plans of the US Federal Reserve in its bond buying stimulus programme is sure to weigh on the Governor Dr Raghuram Rajan,” said Mr Rana Kapoor President ASSOCHAM.

In so far as the pure play of interest rates is concerned, there are a number of sectors like consumer durables, automobiles, real estate and MSMEs which would like RBI to at least drop the policy rate moderately, points out the ASSOCHAM paper.

The Federation of Indian Chambers of Commerce and Industry (FICCI) economic outlook survey has forecasted 4.8% GDP growth for the Indian economy this year, marginally below the earlier estimate of 5%.