Mumbai: Policy statement was on the expected lines. Given the current scenario in the fixed income and forex markets largely on account of expected US Fed rate hike, the statement that RBI will remain accommodative, if the room becomes available, has given some comfort to the market. New guidelines on base rate calculations are expected soon and banks will realign the rates to new methodology. This along with the proposal to link small savings interest rates to market interest rates is expected to facilitate better transmission of monetary policy.
Quote from VS Parthasarathy, Group Chief Financial Officer, Group CIO & President (Group Finance and M&A) Member of the Group Executive Board, M&M Group :
“Today’s absence of rate action was a forgone conclusion. This time around the focus shifted to base rate restructuring and the transmission of lower rates to the wider economy. In addition, the retention of growth and inflation targets, and remaining accommodative on evolving data points demonstrates an outlook of stability which is welcome. It is also good that the Fed actions do not overtly worry the RBI, signalling that we can ride out any currency volatility. The Governor’s concerns on an uneven recovery and moderate, if not weak, rural demand would be readily shared by the industry, which also hopes for early recovery to convert into sustained growth.”
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