RBI Policy Review

To me the rate should remain same.

  1. Inflation is inching up(5.39% in April, the latest figure). This push the real rate at 1.1% for 6.5%. This warrants wait.
  2. According to the latest number the growth(though people can have issue with calculations) is robust. At 7.9%, India is fastest growing major economy. So better watch out rather then risk heating up.
  3. Oil Prices are also inching up, from the lows of $30 it is going to $50. So the risk of upside is higher now.
  4. From the present reviews, the liquidity is already there. Lowering the rate should rather be delayed.
  5. The latest data from US is not very encouraging in terms of job. So there is a good chance that FOMC will not be very inspired to raise the rate on 16 June.
  6. Only MET dept news on above normal is   encouraging, apart from that this blog believe that status quo should be mentained.

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