Will look for policy statement if RBI cuts repo rate: I-Sec PD

The Reserve Bank of India (RBI) in its monetary policy meeting will announce its latest decision on interest rates, where it is expected to maintain status quo or cut the repo rate by 25 basis points (bps) to 6 percent. Speaking to CNBC-TV18, A Prasanna of ICICI Securities Primary Dealership said that the rate cut decision is a close call and in any case, the RBI is nearing the end of rate cut cycle. "The central bank also has to think carefully whether it has to cut rates now or in April," he said.If the monetary policy committee cuts rate, Prasanna said he would look for whether the central bank modifies the policy statement, "perhaps, dropping the word accommodative or qualifying with some other adjective like 'cautiously accommodative'."What to watch out for?Prasanna says the central bank in December policy had targeted 4 percent medium term but there was no mention of this in the October policy. Now, that will be back on the agenda. He added that the target of one year is not possible and it will be a glide path for two years. The economist is looking at a 4.5 percent target by March 2018 and 4 percent by 2019. He also expects a fan chart of inflation for next year to be given out in this policy and also the guidance. "If they cut, guidance is important," added Prasanna. He also said even after RBI cuts repo rate, there may be no rally in the bond market. What the market saysAccording to a CNBC-TV18 poll among market participants, 70 percent believe that the Reserve Bank of India will slash key rates by 25 basis points in February 8's Monetary Policy meet, while the rest say the rates will remain unchanged. All eyes will be on the Governor Urjit Patel's commentary on the inflation target and how he approaches the ultimate CPI goal of 4 percent.