Views of Mr. Dinesh Thakkar (Chairman & Managing Director, Angel Broking) on Monetary Policy Review

"In the backdrop of the Urjit Patel committee report, markets were at best expecting a status quo on rates with a slim probability of repo rate hike. The low probability assigned for a rate hike during this policy review was largely on account of a) food inflation cooling off considerably as compared to the previous few months and b) concerns over slow pace of growth. But the RBI has increased rates and the main rationale for this can be attributed to non food, non fuel CPI inflation remaining elevated. Further, global developments such as tapering by the Fed, fiscal policy tightening as well as the growth-inflation dynamics are likely to determine the policy stance going forward. I believe that the primary respite is expected from further moderation in food prices and further policy tightening is not anticipated. In case the trajectory for inflation decelerates as expected, the RBI is likely to gradually ease policy stance."

Source : Equity Bulls

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