Rana Kapoor
As predicted by a vertical section of the market, the RBI has maintained status quo on signal rates. Recognising and assigning priority to liquidity management in the context of a potential threat to inflationary pressures, further re-iterates the RBI’s objectives of focusing on the relevant issues. The Credit Policy review continues to emphasise on both financial and price stability.
Like the previous policy review, the ‘wait and watch’ policy continues and the RBI, in our opinion, has taken the appropriate stance. Growth has exhibited signs of moderation, and not a significant slowdown so far. Maintaining status quo on interest rates and not acting in panic even in the backdrop of heightened external imbalances exhibits prudence on the part of the RBI.
‘Aggressive’ vigilance
RBI’s articulation of the need for an ‘aggressive’ vigilance over global developments, reflects the preparedness for swift and timely response to unfolding events.
The tone of the policy rightly emphasises longer term domestic fundamentals while being cautious on external developments. Leaving the Cash Reserve Ratio (CRR) unchanged hints at the RBI’s commitment to maintaining appropriate liquidity and addressing credit requirement to productive sectors.
The author is Managing Director & CEO, YES Bank.
