RBI Disappointed Again

In its latest policy review meeting on the 31 July 2012, RBI hasn’t done enough for the economy to take off after having withstood burden of higher interest rates compared to rest of the world. The bench mark rates remain the same. However, as a gesture signalling that the future course would be to lower the interest rates has been shown by reducing the SLR by 1% to 23% . This hasn’t helped the banks much but still adds to banks’ lending capacity.


The inflationary pressure and the possibility insufficient monsoon performance may have been at the back of mind while the needful was not done. In fact I am of the opinion that when the inflation is due to supply side weakness , the interest rates should not be kept unduly high. But since the RBI governors are bureaucrats and want to stick to rule book , these things happen.


Market has well taken the RBI stance in its stride and it seems that with world markets remaining calm , markets here would be improving .




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