The Reserve Bank of India (RBI) has increased the CRR (Cash Reserve Ratio) by 25 bps and Repo rate (the rate at which the central bank lends money to other banks), by 50 bps.
Ritesh Jain, Head – Fixed Income, Principal Mutual Funds commenting on the rate hike in an exclusive conversation. `The tone of policy remains quite hawkish, indicating the RBI`s clear preference towards inflation containment albeit the move may impact domestic growth somewhat.
The policy categorically looks to be concerned about the underlying momentum & aggregate demand, and it is likely that the monetary steps will continue to remain the first line of defense in anchoring inflation and inflationary expectation.
The RBI has indicated its awareness of risks in the global economy and the willingness to act if need be. In terms of direction, the overall interest rates in the economy will align higher. The deposit rates and the lending rates are also likely to head higher over the next couple of months.`
Ritesh Jain, Head – Fixed Income, Principal Mutual Funds commenting on the rate hike in an exclusive conversation. `The tone of policy remains quite hawkish, indicating the RBI`s clear preference towards inflation containment albeit the move may impact domestic growth somewhat.
The policy categorically looks to be concerned about the underlying momentum & aggregate demand, and it is likely that the monetary steps will continue to remain the first line of defense in anchoring inflation and inflationary expectation.
The RBI has indicated its awareness of risks in the global economy and the willingness to act if need be. In terms of direction, the overall interest rates in the economy will align higher. The deposit rates and the lending rates are also likely to head higher over the next couple of months.`
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