Not much help from RBI even in 2013?

....Given the central bank’s guidance for monetary policy stance, Morgan Stanley in its research report said “We believe that policy rates would be on hold until the end of 2012 with easing to begin from 1Q2013.” It believes that even as inflation starts to ease from Q12013, it may remain above the RBI’s (Reserve Bank of India) comfort zone for longer. Hence, it expects policy easing to be limited to about 50-75 (basis points) bps in 2013......

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Comment

M G WARRIER 

Such quick predictions about future confirms the extent of external pressure on India to conform to certain prescriptions and the manner in which pressures build up. GOI’s helplessness in such situations found expression in transfer of stress to RBI. This time RBI managed to withstand the pressure and go by its perceptions. This was possible because Governor Dr Subbarao and Deputy Governor Subir Gokarn were in a position to defend their considered views. The way in which FM responded to the RBI’s stance sends out disturbing signals.