The markets were largely disappointed by the decision of the Monetary Policy Committee (MPC) to maintain status quo on rates. The expectation was for a 25-50 bps cut in rates. However, the choice of the MPC not to cut rates was a good decision in retrospect. Here is why… Continue reading “Why the Decision of the MPC to Not Cut Rates was a Good Decision”
The RBI Monetary Policy Committee (MPC) will commence its 2-day meeting on 05th December which will conclude on 06th December. The outcome of the deliberations will be captured on December 07th in the form of the Monetary Policy. This policy becomes interesting in a variety of ways. Apart from the global circumstances under which this policy is being announced, the domestic liquidity shortfall will also be a significant factor. Continue reading “5 Factors that will drive the Policy Stance of Monetary Policy Committee”
The RBI monetary policy announced on December 07th 2016 had an element of surprise in that it maintained status quo on repo rates. Considering the low levels of inflation, weak growth and the side effects of demonetization, the markets were expecting a rate cut in the range of 25-50 bps. However, the RBI chose to err on the side of caution.. While the details of the deliberations of the Monetary Policy Committee (MPC) will be available on December 21st, there was virtual unanimity on the decision to maintain status quo on rates. Here are the key highlights of the monetary policy announcement… Continue reading “Key takeaways from the December 2016 Monetary Policy”
It almost appears like a fait accompli. The US Fed has maintained status quo on rates in September and hence the door is open for Dr. Rajan to cut rates in his September 29 review of monetary policy. Actually, it may not be as simple as that. A rate cut will not be as simple as it appears to be. From a practical standpoint, the RBI governor will be weighed down by a plethora of variables before he decides on a rate cut on September 29. These variables will impact not only the rate cut decision but also the extent of rate cut that the RBI will undertake in the forthcoming policy meet.
Continue reading “What will weigh on the RBI Governor’s mind ahead of a rate cut?”