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RBI has maintained status quo on rates: Kunal Shah

RBI has re-iterated that inflation remains the concern and if headline & core inflation doesn’t subside in future RBI will act accordingly

December 18, 2013 12:56 IST | India Infoline News Service
Commenting on RBI monetary Policy, Kunal Shah, Fund Manager - Debt, Kotak Mahindra Old Mutual Life Insurance Limited said “RBI has maintained status quo on rates and have decided to act post the uncertainties on food inflation subside, consensus estimates including ours was for a rate hike of 25bp but RBI preferred to hold, sighting the expected fall in vegetable prices. Clearly concern on growth remains the prime focus of the policy. We believe that current below the potential growth rate, good monsoon & government’s commitment on fiscal deficit should bring down inflation down in future, if not drastically but to sub-10% levels. Nonetheless RBI has re-iterated that inflation remains the concern and if headline & core inflation doesn’t subside in future RBI will act accordingly
 
On external front the response to external sector risks by Government & RBI have shown remarkable results with CAD falling to 3% and forex reserve have risen by $15bn.Bond markets will take it positively and yields should stabilize, however rates may not drop unless actual inflation drops.”

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