RBI policy review: Did they do right?
There was a whole lot of suspense and speculation surrounding the latest RBI policy review, but yet again on the September 16, 2011, the RBI did not bat an eyelid and hiked the rates for another time.
October 05, 2011 / 11:47 IST
By Anil Rego
There was a whole lot of suspense and speculation surrounding the latest RBI policy review, but yet again on the September 16, 2011, the RBI did not bat an eyelid and hiked the rates for another time. The repo rate and reverse repo rate were increased by 25 bps each, to 8.25% and 7.25% respectively. Domestic ScenarioThere has been growing consensus that the growth is likely to be more moderate than projected, there have been revisions in GDP estimates and the latest Asian Development Outlook pegged GDP at 7.9% and estimated inflation to settle around 8.5% for FY2012.Inflationary pressures are expected to ease towards the later part of 2011-12. Stability in oil prices and robust domestic demand should facilitate this. In the current scenario, inflation is likely to remain high for the next few months; and rising inflationary expectations remain a key risk. It is therefore almost imperative that in the short term we continue to struggle with higher inflation.Global ScenarioThe global economy showed signs of a slowdown Q2FY2012, with indicators such as the purchasing managers
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