oppn parties RBI Might Maintain Status Quo on Rates

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
oppn parties
RBI Might Maintain Status Quo on Rates

By Ashwini Agarwal
First publised on 2017-10-03 15:32:55

Since the economy is worse off than it was in August when the last policy review of the RBI’s Monetary Policy Committee (MPC) had taken place, one can safely assume that the body will either maintain status quo on key rates or might even take a hard stance. Ideally, a rate cut is the prescribed medicine for a depressed economy. But India is different and a standalone rate cut, without massive stimulus from the government, is unlikely to help.

The overall mood in the economy is depressed. Inflation has increased on the back of rising food prices. Hence, the MPC will definitely downwardly revise the growth figures. None of the other scenarios or figures provide any comfort. The monsoon was abundant, with only a 5 percent shortfall. But it was highly unevenly distributed, resulting in disturbing predictions for some crops in some regions. This does not augur well for food prices in the coming months, with shortages from drier regions adding to the pressure. It also means that at least some of the farm loans will again have a political write-off, further stressing the PSU banks.

The IIP has not picked up as fast as it was expected to. GST disruption, actual and feared has played a big part in this. The September & October figures may bring some cheer due to the huge festival demand, but on-ground whispers suggest that the growth in festival purchases, both of white goods and fashion apparels, was not as expected.

All this means that the wise heads who gather to debate on monetary policy have a tough task ahead of them. Hence, it is expected that they will play safe and let another two months go by with the same rates.