The Reserve Bank's Monetary Policy Committee (MPC) will announce its final policy review for FY 2017-18 on 7 February. The country's apex bank is likely to keep the interest rates unchanged amid concerns of upside risks to inflation and a surge in bond yields.
As such, the RBI’s benchmark policy rate, repo rate, is expected to remain at 6 percent.
Economists, however, will be closely watching the MPC’s language to gauge whether an extended pause in the interest rate cycle is likely or if rate hikes will begin as soon as 2018.
India's consumer price inflation surged to a fresh 17-month high in December 2017 on the back of higher vegetable and crude oil prices coupled with an unfavourable base effect. At 5.2 percent, it inched closer to the upper end of the MPC's inflation target of 4(+/- 2 percent).