.........What do you think would be the correct course of action the RBI should take?
The RBI has a very tough job ahead of it. When we talk about rate cuts, it should be seen independently of the larger monetary policy. The fact is we have had two cuts in the CRR. If the investment cycle does not pick up, there is going to be downward pressure on the market interest rates and the RBI cannot allow the policy rates to diverge too much from what is happening in the market. Otherwise, the policy rates tend to lose the relevance. So at some point in time, the RBI is going to simply cut the policy rates to bring it in line and in a sense, restore the quiver of arrows that they have. ..............
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