New Delhi: The Reserve Bank of India, in its upcoming credit policy meet, is likely to keep policy rates on hold and liquidity tightening measures in place to help stabilize the currency and curb inflation, says an HSBC report.

According to the global financial services major, the primary concern for the RBI at the moment has to be anchoring elevated inflation expectations and stabilizing the currency, which could face renewed pressures if the Fed begins QE tapering this week, as widely expected.

Global economic conditions have improved for advanced economies, while, emerging markets continue to face challenges owing to the tighter global financial conditions and Fed related tapering fears.

Moreover, the Indian economy is slowing on the back of tighter financial conditions and economic uncertainties, while inflation remains a "concern" and currency continues to face "potential headwinds".

"We, therefore, expect that RBI will keep the repo rate on hold and the currency stabilization measures in place," HSBC chief economist for India and ASEAN Leif Eskesen said.

The rupee is currently hovering around the 62 per dollar level. The local currency had depreciated to an all-time low of 68.85 on August. Meanwhile, expensive onion and other food items pushed the WPI inflation to 6.1 per cent in August.

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