Comment on RBI MPC by Phanisekhar Ponangi, Co - Founder & CIO, Mavenark Asset Managers Private Ltd
Below the Comment on RBI MPC by Phanisekhar Ponangi,Co – Founder & CIO, Mavenark Asset Managers Private Ltd
"The decision to cut repo rate by 25 bps surprised the market as a host of external and internal factors seemed to indicate status quo. On the external front, the rupee has been under pressure over the past few days on the back of FII outflows while the US trade deal continues to keep the street on its toes.
Closer home, while the capacity utilization in manufacturing is steady at around 75% for the past few quarters, and all major supply side factors are stable, the MPC seems to have taken cognizance of the anemic inflation rate of 0.25% which if unaddressed can turn into a monetary and fiscal policy challenge.
Under these conditions, the MPC has taken a well-considered decision to frontload the growth stimulus in the form of a 25-bps repo rate cut as it seems to be keen to drive consumption in the backdrop of a benign inflation."
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