Apex bank continues to be cautious in its fight towards inflation: Sachin Sandhir, RICS

RBI kept repo rate as well as reverse repo rate unchanged.

Dec 02, 2014 04:12 IST India Infoline News Service

With moderation of inflation there was an expectation of the industry that the Reserve Bank of India (RBI) will cut interest rate in its bi-monthly monetary policy. A rate cut at this stage would have further galvanized the market sentiment and helped in growth. Rate cut will particularly help companies with huge debt on their books. This would have helped companies in the real estate space too which are currently reeling under high levels of debt. However, RBI kept repo rate as well as reverse repo rate unchanged.

Sachin Sandhir, Global Managing Director, Emerging Business and MD, South Asia, RICS believes that the much anticipated headroom for easing the policy stance is still far from being achieved.

He said, " As the RBI Governor said in his previous monetary policy announcement that he will look at base effect while considering the rate cut, the move is well intentioned"

Driven by softening of fuel and food prices, the wholesale price inflation dropped for the fifth consecutive month to 1.77 per cent in October, its slowest since October 2009. Retail inflation at 5.52 per cent has been the slowest since January 2012. Prime concerns such as food inflation, slowed to 2.7 per cent in October, from 9.6 per cent in May - its lowest level since February 2012. RBI is targeting retail inflation at 8 per cent in January 2015 to 6 per cent in January 2016.

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