View on Monetary Policy - Suvodeep Rakshit - Sr. Economist - Kotak Institutional Equities

View on Monetary Policy from Suvodeep Rakshit - Sr. Economist - Kotak Institutional Equities

"The RBI's action was focused around liquidity management, albeit, through the mix of tools already available (MSS, CMB, term repos/reverse repos, OMOs). RBI remains cautious on the inflation trajectory and believes that achieving the 4% mark will not be easy. Seemingly, RBI remains wary of upside risks to inflation more even though it highlighted that risks are evenly balanced. In fact, it sees inflation path in FY2018 as uneven and upside risks exists in the second half. RBI seems positive on growth and expects the output gap to close gradually which will emanate upside risks to inflation. We expect RBI to remain on a pause unless inflation significantly surprises on the downside and favorable global conditions evolve. We continue to expect inflation to be around 4.5% in H2FY18 while it could average at 3.5% in H1FY18."

Source : Equity Bulls

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