Comments on RBI Monetary Policy by Rajiv Sabharwal Tata Capital
RBI has not changed repo-rate in its bi-monthly policy review. Markets were expecting 25 basis points rate cut but now the expectations have been delayed by two months. RBI has been reducing repo-rate in its previous policy meetings.
Comments on RBI's policy by Mr. Rajiv Sabharwal, MD and CEO, Tata Capital follow.....
RBI surprises the markets with a pause after 5 consecutive rate cuts. This is aligned with the current inflation trends.
CPI inflation has seen a transient spurt due to rise in food inflation and RBI will continue to be cautious. Crude oil dynamics are expected to remain stable and any supply cuts will be offset by a weaker demand.
The accommodative policy stance assures of a supportive interest rate regime and durable liquidity. The transmission of previous rate cuts has been passed on efficiently as reflected in the bond markets. Further, the government’s on-going initiatives will help revive the economy.