What is up for the common man in monetary policy review today?

Yet again the fear has begun to loom over inflation at the onset of festive seasons. RBI GUV, Raghuram has acknowledged the dip in growth and rise in inflation which is good, feels Sachin Karpe.

While reviewing the second monetary policy, we will be expecting some major steps. His last review helped Rupee notch up against dollar significantly. This beefs up positive sentiments and expectations from this review, tells Sachin Karpe.

It could raise repo rate, the rate at which banks borrow money from RBI, determining the interest rate of the economy. Higher interest rate is an important tool for RBI to curb inflation. RBI will also look at loosening the liquidity by increasing the repo rate windows for banks. This was taken to repair the rupee depreciation. Since rupee has been displaying rapid signs of recovery, RBI could mull over increasing it, especially, since the festive season has kick started.

Regarding the current account deficit, which was one of the primary reasons for the depreciating rupee, the RBI said recent trade data suggests it will improve in the second quarter. The forecasters project it to come down to 3.5 percent, Sachin Karpe said, referring a PTI story.

It will too soon to call it a market reforming review. Many more frequent but slow measures will be required to bring the economy back on tract, feels Sachin Karpe.

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