In its first monetary policy review after multi-crore scam was detected at a Mumbai branch of Punjab National Bank (PNB), the Reserve Bank of India (RBI) may maintain status quo in policy rates, global brokerages said. The rates may remain on hold and the central bank may maintain its neutral stance, American brokerage Morgan Stanley expected in a note. Bank of America Merill Lynch (BofAML) also echoed a similar view but also added that rate cut may happen in August if monsoons are favourable, PTI reported. With inflation in March quarter all set to average 4.6 percent, 0.50 percent below their 5.1 percent forecast, RBI MPC may come up with a balanced tone on April 5, the global brokerage said. The inflation is expected to cool down further after moderating to 4.4 percent in February. The inflation reached concerning 5.2 percent in the month of December.
The MPC meeting will start on 4 April and the resolution will be decided the coming day. RBI Governor Urjit Patel will hold the first post policy interaction with journalists after PNB scam was detected. Over Rs 13,000 crore scam was detected at the Brady House branch of PNB in Mumbai on 13 February in which diamond businessman Nirav Modi is the prime accused along with his uncle Mehul Choksi.
Morgan Stanley also said that the MPC is most likely to vote 5:1 pattern in favor of holding rate, just as it did last time. The inflation may be on a upside in the June quarter, BofAML analysts said. The recovery of the economy is still at an early stage and therefore neutral stance may be continued by the central bank, it said.