Status quo on rates along expected lines: Angel Broking

Views of Mr. Jaikishan J Parmar (Research Analyst, Angel Broking):

"The Monetary Policy Committee (MPC) held the repo rates at 6% in its April policy. This leaves the reverse repo rate at 5.75% and the bank rate st 6.25%. While the markets were expecting some changes in the SLR ratio, the MPC has chosen to hold the SLR AT 19.5% and the CRR at 4%.

The good news for the markets could be that the MPC has maintained its neutral stance in the policy. That means the RBI may not be too inclined to hike repo rates unless the US Fed opts for 4 rate hikes in 2018. The MPC has maintained GDP growth projections for 2018-19 at 7.4% and the GVA at 7.2%.

It needs to be remembered that the actual inflation trajectory will depend on the monsoons, Kharif output and oil prices. The MPC has guided inflation at 5.1% in the first half of the fiscal and 4.6% for the second half of the fiscal. The government is wary about rate hikes as it would negatively impact its borrowing program. While the vote was 5:1 in favor of status quo on rates, greater details will emerge only when the MPC minutes are made public in the third week."

Source : Equity Bulls

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