Well balanced policy with focus on structural imperatives as well as near term concerns.

RBI has taken a balanced approach considering various developments across the globe and their near term impact, as well as the structural imperatives for India. Given the recent trends in the foreign exchange market, the reduction in the MSF rate and the minimum daily CRR requirement for banks is a welcome move. Simultaneously RBI has sought to anchor inflation expectations in the system by raising the repo rate. The policy signals the return to the repo rate as the key policy tool  as well as RBI’s intention to cautiously unwind the exceptional measures and place greater emphasis on the long term growth-inflation dynamics. This should be viewed as positive for the long-term economic environment as well near term stability in financial markets.

Source : Monali Dey