..............Prudence demands that the RBI does not overlook these ground realities and go in for a reduction in policy rates to suit the sentiments of the market or expectations of some segments in the economy. The RBI’s concerns can be well gauged from the policy statement, where it categorically observed that “while several measures have been taken to contain the current account deficit, there is an urgent need to be vigilant about the global uncertainty, the rapid shift in risk perceptions and its impact on capital flows.”............
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1 comment:
The article is a good analysis of the monetary policy stance at the current juncture. The alarming rise in CAD and the likely spurt even in headline inflation ere long, notwithstanding the predicted good monsoon are enough reasons for a cautious monetary policy.
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