पत्रिका जगत Positive Journalism
Jaipur, 4th April 2019:“The first MPC meeting for FY 2020 delivered a combination of a 25 basis rate cut and continuance of neutral stance, as expected.
That the rate cut was supported by a 4-2 majority, endorses the fact that, the members of MPC have continued with their known stance on macro-economic developments. With output gap remaining negative and domestic economy facing headwinds from global sluggishness, the rate cut was timely and coming as it does on back to back sittings, it should augur well for coming quarters. Real rates are still higher which would leave room for further cuts in either the June or the August policy, once the new government presents the final budget document in July.
Retail Inflation estimates have been downwardly revised by about 40 basis for each of the half years in FY 2020. Although Met departments have sounded less sanguine on monsoon, the policy appears to be less wary of a likely threat from surging food inflation in summer months. The other important development is lowering GDP growth estimates by about 20-30 basis in H1 FY2020. This assessment should be seen as a fair reflection of the global backdrop and coinciding with a period where the country witnesses General Elections, when currency slippage may be higher.
While there is no special reference to liquidity measures, the policy document and the subsequent press conference re-assures that RBI will continue to employ all possible tools available to keep liquidity adequate. Rate cuts are more effective when liquidity is positive – therefore, the operating theme could be to move to a durable positive liquidity which could by itself mark a step towards a more accommodative stance. With further easing by 2% for the purposes of LCR, the focus is clearly to support growth from a liquidity standpoint.”
