RBI to announce its first policy review today

The Reserve Bank of India will announce monetary policy review today, the first after demonetization of old 500 and 1000 rupees notes, amid expectations of interest rate cut. Ahead of the policy statement, the six-member Monetary Policy Committee, MPC met yesterday amid widespread expectations of at least 0.25 percent (25-basis point) cut in the policy rate to cushion the impact of demonetisation. 

This is the second meeting of MPC headed by RBI Governor Urjit Patel after the first in October, when it had cut repo, or the short-term lending rate, by 0.25 percent to



6.25 percent. RBI has reduced the policy rate by 1.75 percent since January 2015. For long, the central bank has been unveiling the monetary policy at 11 am. 

It will be for the second time that the monetary policy would be based on the recommendation of the MPC. There are expectations of rate cut in repo as banks are flushed with funds following demonetization of old high value notes from November 9. RBI has already taken a host of steps, including 100 per cent incremental increase in Cash Reserve Ratio, CRR, to suck out excess liquidity from banks.