RBI Monetary Policy - Comments by Karan Mehrishi, Lead Economist at Acuité Ratings and Research

"RBI's decision to hold rates at 6.5% is largely driven by a challenging liquidity scenario and the currently benign domestic inflationary conditions. Nevertheless, we prefer to maintain an upward bias on our rate outlook since the combined CPI number is artificially deflated by lower food inflation figures. Also, the OPEC meeting on December 6th will be crucial from the inflation perspective as the members may consider constricting supplies in view of the falling oil prices. Additionally, there is a risk of the market misunderstanding the stance of the US Fed, which may not be in a position to hold rates longer in an US environment characterized by ultra-low unemployment and inflationary tendencies. Collectively, these factors may not give the RBI a long enough breather on the rate front."

Source : Equity Bulls

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