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Which Way Will Inflation Go?
Jun 10, 2017


The RBI's status quo in the latest Monetary Policy review seems to have disappointed many. Especially the government. A rate cut may have underscored the government's claims of revival in the economy. But unlike the new GDP and IIP data, the RBI's monetary policy did nothing to support the claims.

The RBI, instead, made it amply clear that economy needs revival of private investment, restore better health of banks and removal of infrastructural bottlenecks. Without these, the rate cut would hardly stoke growth.

Also, while the RBI has lowered its inflation expectations, it maintains a hawkish stance. Understandably so, given the overhang of the GST.

The key warning from the RBI came on the overleveraged corporate sector and stressed banking sector. Both together may delay the revival in private investment demand. And without the resolution of bad loans, the RBI's job is hardly complete.

Data Source: Swarajya, CRISIL

This Chart Of The Day was published in The 5 Minute WrapUp - How to Ride Alongside India's Best Fund Managers

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