RBI’s monetary policy stance, a statement to the country

With the current financial scenario looking grim for the nation amidst widespread calls of slowdown and the entire industry’s bedrock in the form of NBFC’s and banking sector taking the beating from the controllers and the regulators and at the same point of time the moot concepts of capital infusion in the sector has led to a chaotic stance in the financial horizons of the country. The outflows of FDI from the financial market on the back of interest rate cuts by the federal bank in the United States had prompted the Indian central bank to rethink its steps in order to contain the logistical and the structural nightmare that has begun its descend on the Indian economy; the starters package had included a fall in the growth rate from the previously estimated 7.5% to the now redefined growth rate of about 5% year-on-year.

The monetary committee has cut the interests by about 135 basis points this year with 100 basis points equalling to 1%, this cut was seen by many central banks in the world as the accommodative stance that was maintained by the monetary policy committee with respect to the low inflation rates that were prevalent in the market and which have taken a drastic steep trajectory in the recent past because of factors such as incessant rains and the destruction of crops, all these factors have resulted in a heavy burden on the market and increased the inflation from 2.8% to 4.7% in the past month.

The behemoth task is in analyzing the higher liquidity market infusion still carries an accommodative stance as inflation has been kept in control towards the contour values of   4 ± 2% towards the domestic consumption-led inflation.