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Below are View on RBI Pre-Monetary Policy October 21 by Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank Ltd

“While the economic environment has changed since the last policy, the MPC is likely to keep a status quo on interest rates and an accommodative stance. Economic activity has seen a good uptick and this is evident across almost all high frequency indicators. Consumption demand too is on the rise and this is expected to accelerate as we get into the festival season. These trends need to sustain for the MPC to shift its stance on interest rates. Inflation has come off since the last policy, however, supply side constraints and fuel hikes are likely to be inflationary.

Some global factors such as a crude price hike due to shortages in China & the UK and the Federal Reserve indicating that it is likely to begin tapering by the end of the year could cause volatility. The MPC will keep a watch on all these factors, with domestic growth and inflation likely to guide its policy stance. If the green shoots of economic recovery sustain, then it is possible to expect some steps in the latter part of the year on liquidity and the reverse repo. - Shanti Ekambaram, Group President – Consumer Banking, Kotak Mahindra Bank Ltd.

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