Monetary policy review on July 28

The Reserve Bank of India (RBI) will announce its first quarter review of the Annual Monetary Policy on July 28. "D Subbarao, Governor, Reserve Bank of India will release the first quarter review of Monetary Policy 2009-10 on Tuesday, July 28, 2009," the central bank said in a release on Thursday.The RBI statement further added that the review will be released at a meeting of the chief executives of major scheduled commercial banks on that day in the Reserve Bank of India central office in Mumbai. With WPI-based inflation moving into the negative zone for two consecutive weeks, and with the economy still sluggish there has been some clamour for further easing in monetary policy. The Government too has been repeatedly pressing the banks, especially the nationalised ones, to lower borrowing costs for households and corporates in order to bolster economic growth.However, it remains to be seen what action, if any, Subbarao & Co. takes on July 28 given the fact that consumer price inflation (CPI) has been running at around 9-10%, and liquidity too is not an issue.The RBI has cut the repo rate by 425 basis points since October and reduced the reverse repo rate by 275 points to mitigate the fallout on India from the worldwide financial meltdown. The central bank expects the Indian economy to grow by 6% in the current fiscal year compared with an average growth of 8.5% in the previous five years. WPI inflation is seen touching 4% by March 31, 2010. Falling WPI-based inflation is only a statistical feature and doesn’t mean India is suffering from deflation, RBI Governor Subbarao said on June 20. The RBI will take into account other benchmarks of prices when it decides on monetary policy, according to Subbarao.Consumer prices paid by farm and rural workers jumped 10.21% in May from a year earlier, after rising 9.09% in April. Consumer prices paid by industrial workers rose 8.7% in April from a year earlier, after gaining 8.3% the previous month, according to government data.