RBI monetary policy review - Mr. Mustafa Nadeem, CEO, Epic Research

Amid the ongoing fears of Trade war, Softening inflation and kick off to government borrowing, that is being offloaded, RBI Kept the repo rates unchanged and keeping its stance very clear which is focused on Containing the inflation and improving the overall growth. The key Repo rate has been kept at 6 and other key parameters remaining the same has been widely expected while 5 out 6 members of MPC were neutral.

The stance was widely expected because there were numbers of things that were in favor. GDP inching to 7.2% and now is projected to 7.3 in the coming Financial Year. Secondly easing of Inflation from 5.21 high to below 5.9% and looks to be contained now with projection in 5.7 to 5.9%. On top of it, we have seen latest monsoon reports projecting the normal forecast paves the way for RBI to keep its stance NEUTRAL.

This is a comfortable scenario for RBI while the only itch is of the crude oil which was pegged at $55 is now pegged at $68 and there is a potential risk to the Inflation. So that is one concern along with Fiscal deficit. Government borrowing being reduced in a year which is followed by an election is also a straightforward stance set by the Govt and its policy on fiscal prudence.

Source : Equity Bulls

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