Raghuram Rajan to stay static with RBI Policy

Raghuram-Rajan-to-stay-static-with-RBI-Policy

 

RBI Governor, Raghuram Rajan is going to retire on 4th September so he said “As far as I, Dr. (Urjit) Patel and Dr. Michael Patra are concerned, we see the glide path as attempting to reach 4 per cent by March 2018.”

According to the last policy announced by Raghuram Rajan on Tuesday, the previous policy rates remain unchanged.

 

Policy Rate Percentage
Policy Repo Rate 6.50%
Reverse Repo Rate 6.00%
Marginal Standing Facility Rate (MSF) 7.00%
Bank Rate 7.00%

 

Reserve Bank of India Governor Raghuram Rajan on Tuesday said the central bank has been operating with the objective of getting inflation down to 4 per cent by March 2018. So he said this process will be done gradually.

On Tuesday Governor told wire agency reports at post policy interaction that “When the new Governor and the new monetary policy committee (MPC) come in, they will have to give you a sense of how they view the 4 per cent target for March 2018,”

According to Raghuram Ranjan, MPC will start functioning by the time of next policy announcement on 4th October, 2016.

Market participants will be interested in knowing the future trajectory of interest rates. Rajan has cut rates by 150 basis points even since he took charge in September 2013.

 

Look at are some key points

1. Along with rising prices of pulses and cereals services inflation remains sticky. There are early indications, however, that prices of vegetables are edging down.

 

2. Pick up the rural Economy

RBI says development in various areas like Barring cotton, jute and mesta, sowing of all crops will give confidence about the near-term outlook for value added in agriculture.

 

3. Resilient manufacturing sector 

Policy document says “Barring the contraction in natural gas and crude oil on account of structural bottlenecks, the core sector has been resilient so far, and should support industrial activity going forward.”

 

4. Service Sector holding up economy

RBI says that the robustness in service sector is gradually getting broad based. Automobile sales across most segments, railway, port and international air freight traffic, foreign tourist arrivals, and domestic air passenger traffic are providing the underlying momentum for the upturn.

 

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