What to expect from the Monetary Policy Committee led by Urjit Patel in his statement today

The Reserve Bank of India (RBI) will release today its monetary policy statement. Analysts will closely follow the results of this three-day meeting to find out whether the central bank's Monetary Policy Committee decides to raise the repo rate – the key rate at which the RBI lends short-term funds to commercial banks – or to Introduce a more aggressive approach. political position. The Monetary Policy Committee, headed by RBI Governor Urjit Patel, had, in its latest bi-monthly review, raised the pension rate for the first time in four and a half years and maintained its neutral stance, citing the rule of thumb. uncertainty of inflationary risks. Since then, rising consumer inflation and declining industrial production have prevented economists from knowing what to expect from the central bank.

Here are ten things to know:

1. Economists polled by the Reuters news agency are almost equally divided on the next rate hike while inflation is higher than the RBI's medium-term goal of 4% for eight months and should remain unchanged until the end of next year.

2. The "neutral" position adopted by the central bank in October 2016 allows it to move back and forth on benchmark interest rates. A move to a "warmonger" would mean more aggressive action on key rates for the future.

3. Many analysts expect the Reserve Bank of India to raise the repo rate by 25 basis points, or 0.25 percent. A rate hike will be the first move towards a tightening position in the current cycle, they say.

4. The main reasons cited by them are as follows:

• Inflation : While retail inflation (consumer price index) accelerated to 5% in June. This marks an evolution further away from the central bank's medium-term objective of 4%. Global inflation (wholesale price index) reached a high of 5.77% in 54 months during the month
• Higher minimum support price (MSP) : the government liquidated the minimum prices of 14 kharif move together to cost around Rs 15,000 crore. According to analysts, this could lead to an increase in food inflation
• Weakness of the rupee : The rupee has not yet shown signs of significant strength against the US dollar. Since the last policy review, it has remained at 68-69 levels against the greenback. On Tuesday, the rupee rose 13 pence to settle at a high of 68.54 in two weeks. Any comment on the rupee in Wednesday's policy statement will determine the movement of the currency in the coming weeks.

5. "Rising input prices and the depreciation of the currency indicate a build-up of inflationary pressures: the combination of higher government spending ahead of the next election, its reflation effect and the re-emergence of margin pressure on the manufacturing sector will increase. both overall inflation is going forward, "said Dhananjay Sinha, chief researcher, economist and strategist, Emkay Global Financial Services.

6. According to Mr Sinha, who expects the RBI to increase the repo rate by 25 basis points in today 's statement, the growing restrictions of world trade and the rises tariffs can create new inflationary pressure. Suvodeep Rakshit, chief economist, Kotak Institutional Equities, is also expecting a 25 basis point rise. "Even if we call for a rate hike, the RBI could wait before seeing if the increases in the MSP (minimum support price) start to affect food prices and how inflationary expectations have changed in the last quarter" .

8. Others expect a more uncertain outcome from the monetary policy statement today.

"While the market expects a rate hike, we think that it is a case with an almost equal probability of action on rates. The RBI can continue to focus on inflation, the budget deficit and global geopolitical uncertainties … to dominate RBI's spirit-space, "said NDTV Killol Pandya, head of fixed income, Essel Mutual Fund. Expects that the tone of the RBI "will remain neutral to hawkish."

10. The RBI had, in its review of the June policy, raised its inflation forecast for the second half of the year. FY 2018-19 at 4.7 percent, up from 4.4 percent Analysts will monitor any further changes in the central bank's inflation projection for the year

(With agency entries)