RBI likely to leave policy rate unchanged at 6.00 pct, maintain neutral stance: Scotiabank

The Reserve Bank of India (RBI) is expected to leave its policy rate and CRR unchanged at 6.00 percent and 4.00 percent respectively with a neutral stance this afternoon, aimed at striking a balance between bolstering the nation’s economic growth and securing the retail inflation target of 4 percent±2 percent on a durable basis, Scotiabank reported.

India’s cumulative fiscal deficit has reached INR5.25 trillion as of August, or 96.1 percent of the fiscal deficit target of INR5.47 trillion for FY2017-18. The little room left for the government to boost spending could see a breach of the target easily in the months ahead.

In addition, the finance ministry said in a statement Tuesday that the basic excise duty on gasoline and diesel will be cut by INR 2 a liter with effect from Wednesday, which would lead to a revenue loss of about INR130 billion in the remaining part of the current fiscal year.

Moreover, Politico reported that Kevin Warsh and Jerome Powell are frontrunners for the next Fed Chair and Treasury Secretary Steven Mnuchin favors Powell, citing unidentified people close to the selection process.

"We see upside potential for USD/INR in the weeks ahead, particularly if taking into account the US GOP tax reform plan," the report commented.

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