By 121 News
Chandigarh 08th February:- The key highlight of the sixth bi-monthly RBI credit policy of 2017 is the change in monetary policy stance from Accommodative to Neutral. This coupled with no change in the repo rate has come across as more hawkish than expected.
Volatile global trends, expected higher inflation, growth and interest rates in the US, and sticky domestic core inflation other than food and fuel seem to have influenced the change in stance.
Inflation targeting is key here. While inflation is likely to be subdued in Q1 of FY 17/18, upside risks outlined have firmed up global commodity prices including energy, currency volatility due to global factors and inflationary impact of 7th pay commission.
Banks have already transmitted rate reduction on account of liquidity surge in the banking system as a result of demonetization. This is expected to spur consumption and investment. Overall, the policy has a hawkish tone. From here on, global and local factors will be monitored closely to see the impact on inflation and growth for future policy stance.
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