Monetary Policy - Views from Jonathan Anchen, Head of Economic Research & Consulting India, Swiss Re

Views from Jonathan Anchen, Head of Economic Research & Consulting India, Swiss Re, on Sixth bi-monthly monetary policy statement by the Reserve Bank of India

"As expected the monetary policy day has passed without any action on the policy repo rates. We expect that the RBI will wait for the fiscal numbers to be released in the Budget before taking a decision on rates. After all the governor spoke strongly on this issue only last Friday when he said that more spending may hurt debt dynamics, and that growth multipliers on government spending could be relatively small. While the Governor felt that it is unfair to read his statements as hawkish, it seems that the RBI is not as dovish as in the previous policy statement. Two key areas we should watch out for are the development of inflation and the structural reforms.

The momentum in CPI inflation has picked up since the last policy announcement, and there are a number of downside risks that add additional uncertainty to the baseline inflation forecast. In terms of what we could expect in the coming months, the RBI is clearly looking for fiscal measures that boost growth, while at the same time control spending before more space can be created for monetary policy to do more."

Source : Equity Bulls

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