Mid-quarter Monetary Policy review
- A non-eventful mid-quarter monetary policy review given status-quo in terms of policy actions. Repo rate unchanged at 8.5%. Reverse repo / MSF stand at 7.5%/9.5% respectively
- RBI acknowledges the weakening demand side as reflected in the recent IIP nos. While inflation has eased (Jan'12 stood at 7%), the underlying inflationary impulses are still prevalent
- Despite, CRR cut (releasing Rs800bn) + OMO purchase (Rs1.2tn), LAF window is unlikely to ease given widening CAD.
- While the prevailing growth-inflation dynamics has provided scope for easing, RBI / and we still believe that the condition is not ripe for a decisive rate cut in the near term