RBI today kept the much-anticipated icing on the cake repo rate cut unchanged after friday’s mojo by PM Dr Manmohan Singh, view was that the RBI would give us a feel good reason by interest rate cuts.. which didn’t happen.
RBI has its own reasons, inflation is still sticky and with rise in diesel prices it may become sticky more…, liquidity in the system is comfortable compared to three months back, they want to see how the govt’s efforts pan out over time before they cut the rates i.e how much of fiscal deficit can be actually reduced and what happens to all the QE3 money from US , would they spike up prices of oil and which in turn negate govt’s efforts to bring down the fiscal deficit.
Mr Subbarao would like to weigh all options before going for the rate cut .
Buoyancy doesn’t mean rate cuts !!
WUDSTREET Investment Services 