Despite of the glooming economy, RBI maintained the repo rate at 7.50 without any raise in the last review in December. It is expected that in the coming review of monetary policy to be held today, RBI will keep the same base rate.
Governor of RBI Mr. Raghu Rajan stated that the not only consumption, but investments too are effected by high interest rates. Before December Mr. Rajan had twice increased the repo rate by quarter points. There are factors that make the cause for hiking rates.
First reason that need to taken for hike in repo rates the recently the falling value of Indian currency against dollar is still vulnerable, it can bring back high inflation. Secondly to control the (consumer Price Index) CPI inflation RBI need to hike the rates. The decision will be finalized in today’s review.