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India's Policy Rates Compared to Asian Economies
Aug 3, 2017

The Reserve Bank of India's (RBI) monetary policy statement is one of the most tracked events in the financial world. With both core and retail inflation easing to new lows, a rate cut in key interest rates was widely expected. The RBI did not disappoint and announced a quarter of a percentage point cut.

The decision is in line with the RBI's neutral monetary policy stance, tracking the rate of inflation.

The chart below shows how India's inflation and policy rates stand in comparison with other Asian economies.

However, the central bank in its monetary policy statement expects inflation to rebound soon.

The RBI's monetary statement in June had projected quarterly average inflation in the range of 2-3.5% in the first half of fiscal 2018, and 3.5-4.5% in the second half. Now it expects inflation to be about 4% by the year end. As long as inflation follows this track, the possibilities of rate cuts during this fiscal year remain slim.

Rate cut or not, we do not attempt to predict how and when macroeconomic developments will unfold. Instead, we focus on the fundamentals and the underlying business strength of companies. The ValuePro team is always on the lookout for all-weather stocks whose fortunes are not tied to economic cycles.

Data Source: Livemint, Trading Economics

This Chart Of The Day was published in The 5 Minute WrapUp - This Insider Beats Promoters at the IPO Game

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