Goldman Sachs expects RBI to hold on to repo rates at 6.5 per cent

MUMBAI: American investment bank Goldman Sachs expects the Reserve Bank of India to keep the policy rates unchanged at 6.5 per cent when the RBIs monetary policy committee is to decide on rates on Wednesday, December 05. “ RBI is expected to remain on hold until early 2019 due to exceptionally soft food inflation so far, softer momentum on Indias growth and a significant change in the global environment since the last monetary policy meeting” said a report by the investment bank. It has forecast Indias economic growth at 7.3 per cent and 7.6 per cent respectively in FY19 and FY20, respectively, a tad lower than its previous forecast.

Goldman Sachs expects some pick up in food inflation later next year, as favourable base effects begin to wane and favourable base effects begin to wane. Momemtum is also expected to build up from stronger agricultural support prices and rural wages, it said.It also expects vegetable inflation to come back again.

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