For Dr Yaga Venugopal Reddy who has smiled his way through a 4-year term at the helm of the RBI, this could be the final credit policy he delivers, but also one of the toughest.The policy comes at a time when economic worries continue to be at fever pitch.
Inflation is still in double digits at a 13-year high, and on the other hand Industrial production is starting to look shaky raising fears about growth.But for now bankers who are already feeling the sting of RBI''s inflation fighting measures expect the RBI to continue its focus on inflation, which could translate into another rate hike.
The key monetary indicators including money supply, credit and deposit growth are above RBI''s target zone. So bankers are forecasting a 25 bps hike in repo rate.A CRR hike is less likely but nevertheless a 25 bps hike cannot be ruled out. Liquidity is expected to ease in mid-August with government spending and bond redemptions expected to pick up.But there are still those who hope the RBI will not hike rates yet and wait to see the impact of measures already taken before delivering another dose of rate therapy. So even if the RBI chooses to spare the economy another rate hike in this time''s policy, the central bank''s stance will remain a tough one and inflation will remain the priority.
Inflation is still in double digits at a 13-year high, and on the other hand Industrial production is starting to look shaky raising fears about growth.But for now bankers who are already feeling the sting of RBI''s inflation fighting measures expect the RBI to continue its focus on inflation, which could translate into another rate hike.
The key monetary indicators including money supply, credit and deposit growth are above RBI''s target zone. So bankers are forecasting a 25 bps hike in repo rate.A CRR hike is less likely but nevertheless a 25 bps hike cannot be ruled out. Liquidity is expected to ease in mid-August with government spending and bond redemptions expected to pick up.But there are still those who hope the RBI will not hike rates yet and wait to see the impact of measures already taken before delivering another dose of rate therapy. So even if the RBI chooses to spare the economy another rate hike in this time''s policy, the central bank''s stance will remain a tough one and inflation will remain the priority.
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