Indian Central Bank has recently announced its monetary policy. The interest rate has been kept unchanged at 8.5% (repo rate) which clearly shows that RBI is not yet convinced that Inflation is under control. Inflation which has come down Month after Month to around 7% level may go upward if fuel price is increased and fiscal deficit continued to deteriorate. Fuel price is linked to international Crude Oil price which is not coming down although Developed Countries are doing good Economic Growth. In fact crude oil price has increased marginally during the last three Months .The Cash Reserve Ratio cut which was supposed to be announced on 15th March had to be announced few days before looking into the liquidity shortage in the Market. RBI has cut the CRR two times in the recent past and has reduced it to 4.75% from 6% .CRR cut has injected around 80,000 Crores to the Market . RBI is expected to reduce the repo rate by about 100bps during FY 13 and the first such cut is expected by April 2012.The next Monetary policy review by RBI will be on 17th April 2012 .
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