Monetary policy review much similar to what had been anticipated: Economists
By Vaibhav Aggarwal
Dec 19, 2012
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Several noted economists have given their initial reactions on the monetary regulator, Reserve Bank of India's, mid-term monetary policy review. They opined that the central bank's decision to not slash any of the key policy rates was expected and hoped that the reducing inflation may lead RBI to bring about some modifications in its policy stance which is to be released in January.

It should be noted that in this monetary policy review, RBI did not make any changes in the repo rate (8 percent) or the cash reserve ratio (4.25 percent).

Mr. D.K.Joshi, the Chief Economist of Crisil said, "The policy review was on expected lines but I hope the RBI will reduce repo rate by 25 basis points (0.25 per cent) in the January review, and follow it up in the next policies also."

Speaking on the matter, Mr. Abheek Barua, (Chief economist) of HDFC Bank, said: "At the current run-rate, headline inflation is likely to considerably undershoot RBI's March 2013 projection of 7.5 per cent...this is likely to prompt RBI to ease its repo rate by 25 bps in the January review and perhaps again by a similar magnitude in March."

State Bank of India's chief economist, Mr. Brinda Jagirdar said, "The RBI could have reduced the repo and CRR as all the indicators in the recent past were positive. However, it has given an indication that there will be a rate cut in the January policy review, which will support growth. Moreover, the indication to change its stance of policy from inflation to growth is a step in the right direction."

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