Post Monetary Policy Comments - Ms. Radhika Rao, India Economist, DBS Bank

The central bank's stance was largely along expected lines, reflected in a relatively muted response in the bond and equity markets. There is only a slight shift towards a cautious bias, with headline inflation seen above target in FY19 - at above 5% in 1H FY19 and 4.5-4.6% in 2H. They remain optimistic on growth, expecting FY19 to head back towards 7%. The guidance remains data-dependent, with a shift to tighten rates requiring further evidence of a built-up in inflationary pressures. Details on the minimum support prices for the farm produce are awaited, along with the implications on demand conditions from a delayed fiscal consolidation roadmap. Policymakers are also likely to keep an eye on the financial stability risks, arising especially from global policy normalisation risks.

Source : Equity Bulls

Keywords