RBI’s cautious stance on managing inflation is all the more welcome
The results are out. “Curbing inflation remains the highest
priority for the Reserve Bank of India.” Amidst heightened global uncertainty, the Governor of Reserve Bank of India, Yaga Venugopal Reddy, maintained status quo on all policy rates thereby avoiding any tit-for-tat interest rates cut after the Fed slashed rates by 75 basis points. It is an expected move as the government does not want to couple robust economic growth with high inflation. Considering the factors in the domestic & global economy, the move centring on liquidity, curtailing inflationary pressures & managing growth are very much in line. Banking analysts are of the view that RBI’s emphasis on price stability & well anchored inflation, ensures a monetary & interest rate environment, which is conducive to the continuation of the current growth momentum. They feel that maintaining status quo is indeed the best thing they could have done. However considering the rate differential, RBI would be forced to cut interest rates in the near future, for if it does not, then the deluge of foreign exchange flows would lead to a corresponding increase in rupee circulation within the economy and thereby lead to higher inflation and still higher interest rates.
Politically too the government needs to show concern over inflation. Knowing for sure that while growth may not beget votes, inflation will surely lose them, a cautious approach is being adopted.
CII feels that “in uncertain times, this is strategically a good stance, as long as the RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands” whereas ASSOCHAM feels that the restraint shown by RBI would make it difficult for some industry segments to cope up with slackening demands, rising imports and high borrowing costs.
The standstill approach as adopted by RBI will provide it with the flexibility to move either ways based on domestic & global developments for it provides ample scope for future rate cuts as well as sufficient liquidity for business to avail loans and pursue growth. The RBI is in wait & watch mode and is in no hurry to pare rates, given the vulnerability of Indian economy at this stage on imported crude & potential food imports.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
The results are out. “Curbing inflation remains the highest
priority for the Reserve Bank of India.” Amidst heightened global uncertainty, the Governor of Reserve Bank of India, Yaga Venugopal Reddy, maintained status quo on all policy rates thereby avoiding any tit-for-tat interest rates cut after the Fed slashed rates by 75 basis points. It is an expected move as the government does not want to couple robust economic growth with high inflation. Considering the factors in the domestic & global economy, the move centring on liquidity, curtailing inflationary pressures & managing growth are very much in line. Banking analysts are of the view that RBI’s emphasis on price stability & well anchored inflation, ensures a monetary & interest rate environment, which is conducive to the continuation of the current growth momentum. They feel that maintaining status quo is indeed the best thing they could have done. However considering the rate differential, RBI would be forced to cut interest rates in the near future, for if it does not, then the deluge of foreign exchange flows would lead to a corresponding increase in rupee circulation within the economy and thereby lead to higher inflation and still higher interest rates.Politically too the government needs to show concern over inflation. Knowing for sure that while growth may not beget votes, inflation will surely lose them, a cautious approach is being adopted.
CII feels that “in uncertain times, this is strategically a good stance, as long as the RBI explicitly makes it known that it can take any action pertaining to key rates if the situation demands” whereas ASSOCHAM feels that the restraint shown by RBI would make it difficult for some industry segments to cope up with slackening demands, rising imports and high borrowing costs.
The standstill approach as adopted by RBI will provide it with the flexibility to move either ways based on domestic & global developments for it provides ample scope for future rate cuts as well as sufficient liquidity for business to avail loans and pursue growth. The RBI is in wait & watch mode and is in no hurry to pare rates, given the vulnerability of Indian economy at this stage on imported crude & potential food imports.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus
Top Articles on IIPM:-
'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs
No comments:
Post a Comment