RBI to unveil monetary stance on April 1 as industry seeks interest rate cut

Mumbai, March 22 (KNN) Amidst expectations of cutting interest rates by the industries particularly SMEs, the RBI will unveil its first bi-monthly monetary policy on April 1.

The monetary policy will be unveiled in the backdrop of decline in the inflation both based on the Wholesale Price Index (WPI) and the Consumer Price Index (CPI).

A sharp fall in the GDP growth, particularly in the manufacturing sector would also weigh on the mind of the RBI Governor Raghuran Rajan while indicating its policy direction.

Along with the monetary policy, the Central Bank will also release an outlook of India’s macro-economy in an election year.

Several industry bodies including FISME, ASSOCHAM, FICCI etc have been seeking cutting interest rates so that growth can be revived.

The retail inflation rate as measured by the CPI dropped to 8.1 per cent on a year-on-year (YoY) basis this February, compared to February 2013. This was the third month of a falling rate of change in CPI and 8.1 per cent is a 25-month low.

The WPI was up 4.7 per cent YoY in February, which means the wholesale inflation rate has also dropped below the psychological level of five per cent. However, core WPI inflation (WPI minus food and fuel) was up slightly, at 3.15 per cent -in February versus 3 per cent in January. In addition, the Index of Industrial Production (IIP) was positive, albeit barely so, at 0.1 per cent in January 2014 versus January 2013. This was the first positive IIP reading in four months.