RBI has chosen to be cautious now and leave policy space for future support to growth Says Akhil Mittal, Tata Mutual Fund
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Below is the Quote RBI Policy By Akhil Mittal, Senior Fund Manager, Tata Mutual Fund
Taking inflation head-on, RBI has raised rates by 50 bps, in line with our expectations. While showing faith in growth, MPC gave higher priority to address inflation, maintain financial stability in growing global financial volatility, and ensuring policy does not lag behind. In doing so, RBI has shown its resolve towards meeting medium term inflation target and ensuring stability to support medium to long run growth for the economy. The endeavour to get real rates in positive territory, as mentioned earlier by RBI, gets closer with this move and we expect another 50-bps rate hike by MPC over next couple of MPC meetings before the pause.
As we are much better relatively in terms of growth and inflation, we might not have to tighten as aggressively as western countries and hence might not need to turn around policy direction sooner, which reduces policy uncertainty. RBI has chosen to be cautious now and leave policy space for future support to growth.
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