The RBI interest rate signals are normally sent out by the Monetary Policy Committee (MPC), which lays out the broad direction of the interest rates in the market. The RBI normally gives out a signal by tweaking the repo rates. Since the beginning of January 2015, the RBI has cut repo rates by 200 basis points. In addition, the spread between the repo rate and the bank rate has been further compressed by 75 basis points. That means; the total rate cut over the last 3 years has been a full 275 basis points. At this juncture, there appears to be a majority view in the MPC that the interest rate cycle may have bottomed out in India. But the big question is whether there is a case for the RBI to hike the interest rates in the year 2018. Or, is it that any RBI rate cut latest news is ruled out? Let us focus on 3 key factors that could be a key determinant or an indicator of RBI rate action in year 2018..

Retail Inflation (CPI Inflation) could be the big factor in the rate calculations..

retail inflation

10-year G-Sec yields have shown a sharp spike in the last 6 months..

It will predicate on what the Federal Reserve will do on the rates front..




So, what does that mean for the rates scenario?