Views on RBI's monetary policy - Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd

"The MPC in its monetary policy meeting voted unanimously to keep the policy repo rate unchanged at 4% while maintaining their accommodative stance. Keeping in mind the fragile macroeconomic and financial conditions, the RBI has announced additional policy measures to enhance liquidity support for financial markets, improve the flow of credit and further ease financial stress caused by COVID-19 disruptions. Few of the additional measures announced by the RBI include additional special liquidity facility of ₹10,000 crore which will be provided at the policy repo rate. While an amount of ₹5,000 crore will be provided to the NHB an amount of ₹5,000 crore will be provided to NABARD. This move will help improve credit flow to the HFC, smaller NBFCs and micro finance companies. The RBI has also raised the permissible loan to value ratio (LTV) for gold loans taken for non-agricultural purposes from 75% to 90%. The RBIs decision of keeping rates unchanged could have been influenced by the CPI inflation which came in at 6.09% for the month of June and is above the RBI's upper threshold of 6%. While further rate cuts by the RBI will be dependent on inflation coming down current levels, we expect the RBI will try to ensure adequate credit flow to the economy along with taking steps to ensure full transmission of the 250 bps rate cuts done so far."

Source : Equity Bulls

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