RBI cuts rates after 9-month wait, stays cautious

Comments (1)
MehulKhatri wrote:

By this 25 bps cut in rates and CRR, RBI may have indicated its not as rigid on rates as it was generally believed. But the adjoining caveat and caution on inflation and the size of cuts is a reflection that RBI still strongly feels the the economy is out of the firm clutches of inflation. For some it would be wise to admit now inflation has done a lot of damage. We may see a sharp dip in deposit and savings growth as a fallout of the last year’s adamant inflation. Inflationary pressures may not abate as easily and any move to fiscal balancing could invite steps that will only fuel inflation further. On the other hand the first blink from construction industry to ease prices may see worries that this growth engine has lost the torque. Could this be signs of larger horrors in that industry and how wide will ripples go. It will be interesting to see figures from the building and durable goods industry for next few quarters as further inflation, whether supply or demand driven, will only see demand stagnate. Worry is that this time stops could come much too sooner than imagined. I think the RBI has done what it should, now lets see how the government take it from here. For a common man though, last few years have been a place between the rock and a hard place, and they have still have to move mountains to ease the squeeze.

Jan 29, 2013 6:46pm IST  --  Report as abuse
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