Expect RBI to keep policy rates on hold: R K Global

R K Global has come out with its view on RBI's upcoming monetary policy. As per the research firm RBI is expected to keep the policy rates on hold owing to the sticky core inflation and slight recovery in IIP.

Monthly inflation for Dec 2011 was seen at 7.47% (Y-o-Y) compared to market expectations of 7.40%. Recent fall in inflation was primarily on account of a positive base effect and a fall in primary articles inflation. Notably, the manufacturing inflation is still high at 7.41%. Overall inflation is still beyond RBI targeted inflation of level of below 6% which is a worry factor. I think the market is expecting a status quo, no rate cut on CRR or repo side. So, people will be looking towards some sort of comments from RBI as to how they will manage Inflation, growth and liquidity. Any adverse comment will disappoint the market and that may lead to a correction in domestic equity.

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