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The market expects Reserve Bank Governor Raghuram Rajan to hold interest rates at its policy review meeting on Tuesday, a survey has found.
In addition, the market does not expect a rate reduction even in March, Royal Bank of Scotland (RBS) said.
RBS, citing its 19th survey on quarterly monetary policy review, said it took the views of 150 local market participants, including corporate clients, banks, insurance companies and mutual funds, among others.
More than 80% of the respondents expect Rajan to leave both the repo rate as well as cash reserve ratio unchanged.
However, about 19% expect a 25 bps increase in the repo rate on January 28, the survey showed.
Optimism against a rate increase stems from headline inflation, which came in at a surprisingly low 6.12% in December, while retail inflation eased to 9.52%.
Post-policy, about 46% of the respondents want to sell the rupee on upticks, with median expectations of 61.75 by March. Their medium-term expectation is the local currency will remain in the 60-65 range against the dollar.
Rajan increased the repo rate, at which banks borrow from the RBI, by 25 bps each in September and October to 7.75%. He has not tweaked the cash reserve ratio, which is pegged at 4% now.
In the mid-quarter policy review on December 18, the RBI left the key rates unchanged.
