RBI TRIES TO MAINTAIN A STRUCTURAL BALANCE

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Bangalore Nov 5, 2013: Mr. R. Shivakumar, President , FKCCI, commented on the second quarter review of the monetary policy and stated that the policy announced is on expected lines and keeping in view of the continuation of the previous process. The policy provides for increase by way of an increase in term repo limits, but another hike is still possible. The growth rate expectation is low and has raised the WPI estimate overall. Interest hike rates will continue for further periods considering the current status of the economy. Much efforts on reducing the CAD has started yielding the results

The comments so far from RBI suggests still unclear in monetary policy setting, which is likely to be good as the focus is on anchoring inflation to facilitate future growth framework. Also, efforts on reducing CAD (current account deficit) is bearing fruits as of now and inflation control remains still slow and is expected to improve unless the growth picks up in the third quarter of 2013.The bond market has factored in the policy and the additional liquidity support is provided for credit markets.

Infrastructure clearance and investors confidence will alone boost the growth in the long run and the short term measures are generalized and lack consistency in the growth of GDP. Further RBI has taken more care for the sustained growth by enabling the banks to draw money from the central bank in case of necessity for the financing of the projects affected by the liquidity. CCI Newswire

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