Monday 18 June 2012

MoneyControl: Why RBI may not give liquidity boost to Market Today

Hello to friends and visitors. Here is what MoneyControl has published about the topic today:

The Reserve Bank of India will announce its mid quarterly policy today. It is not the one in which the RBI used to announce very big decisions but this comes after the April policy and lot of things have happened in between to change India’s macroeconomic contours, reads CNBC-TV18’s Latha Venkatesh.

Today after the policy the consumer price index (CPI) number for May will be announced and that could well read at 10%. All this will constrain the RBI from announcing too much by way of monetary loosing even if it wants to support growth.


Bankers especially State Bank of India (SBI) said that they will pass on the cuts in the form of lower lending rates only if the CRR is cut. So much depends on how serious the RBI is about monetary transmission. If they are then perhaps the CRR will be an instrument.

From an economist angle, it is still very unclear whether the RBI has much elbow room to cut rates although growth demands some kind of monetary loosening and inflation is not permitting it. [ News Source ]

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